Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Portland General Electric (POR) and Exelon (EXC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Portland General Electric has a Zacks Rank of #2 (Buy), while Exelon has a Zacks Rank of #3 (Hold) right now. This means that POR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
POR currently has a forward P/E ratio of 16.39, while EXC has a forward P/E of 17.35. We also note that POR has a PEG ratio of 2.72. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EXC currently has a PEG ratio of 2.75.
Another notable valuation metric for POR is its P/B ratio of 1.38. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, EXC has a P/B of 1.62.
These are just a few of the metrics contributing to POR's Value grade of B and EXC's Value grade of C.
POR has seen stronger estimate revision activity and sports more attractive valuation metrics than EXC, so it seems like value investors will conclude that POR is the superior option right now.
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