Investors with an interest in Utility - Electric Power stocks have likely encountered both Vistra Energy Corp. (VST) and Southern Co. (SO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, both Vistra Energy Corp. and Southern Co. are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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.
VST currently has a forward P/E ratio of 6.79, while SO has a forward P/E of 17.06. We also note that VST has a PEG ratio of 0.61. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. SO currently has a PEG ratio of 4.26.
Another notable valuation metric for VST is its P/B ratio of 0.98. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, SO has a P/B of 1.79.
These metrics, and several others, help VST earn a Value grade of B, while SO has been given a Value grade of C.
Both VST and SO are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that VST is the superior value option right now.
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Vistra Energy Corp. (VST) : Free Stock Analysis Report
Southern Company (The) (SO) : Free Stock Analysis Report
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