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TRP vs. ORA: Which Stock Is the Better Value Option?

Zacks Equity Research

Investors interested in stocks from the Alternative Energy - Other sector have probably already heard of TC Energy (TRP) and Ormat Technologies (ORA). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Currently, TC Energy has a Zacks Rank of #2 (Buy), while Ormat Technologies has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TRP has an improving earnings outlook. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

TRP currently has a forward P/E ratio of 16.31, while ORA has a forward P/E of 41.97. We also note that TRP has a PEG ratio of 2.33. 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. ORA currently has a PEG ratio of 3.82.

Another notable valuation metric for TRP is its P/B ratio of 2.28. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, ORA has a P/B of 2.53.

These are just a few of the metrics contributing to TRP's Value grade of B and ORA's Value grade of C.

TRP sticks out from ORA in both our Zacks Rank and Style Scores models, so value investors will likely feel that TRP is the better option right now.


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TransCanada Corporation (TRP) : Free Stock Analysis Report
 
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