Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put E.ON SE EONGY stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, E.ON SE has a trailing twelve months PE ratio of 8.04, as you can see in the chart below:
This level is significantly favorable with the market at large, as the PE for the S&P 500 compares in at about 20.12. If we focus on the stock’s long-term PE trend, the current level puts E.ON SE’s current PE ratio below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Utilities sector’s trailing twelve months PE ratio, which stands at 15.54. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that E.ON SE has a forward PE ratio (price relative to this year’s earnings) of 13.26, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, E.ON SE has a P/S ratio of about 0.18. This is significantly lower than the S&P 500 average, which comes in at 3.17 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
E.ON SE is actually trading around the median level of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, E.ON SE currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes E.ON SE a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 1.87, which is much better than the industry average of 7.09. Clearly, E.ON SE is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though E.ON SE might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives E.ON SE a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The full-year 2016 has seen one estimate go higher in the past sixty days and one lower, while the full-year 2017 estimate has also seen a similar trend.
However, this has had a considerable impact on the consensus estimate, as the full-year 2016 consensus estimate fell 19.6% in the past two months, while the full-year 2017 estimate declined 3.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
E.ON SE is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 46% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Utility-Electric Power sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>
Image: Bigstock
Is E.ON SE (EONGY) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put E.ON SE EONGY stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, E.ON SE has a trailing twelve months PE ratio of 8.04, as you can see in the chart below:
This level is significantly favorable with the market at large, as the PE for the S&P 500 compares in at about 20.12. If we focus on the stock’s long-term PE trend, the current level puts E.ON SE’s current PE ratio below its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Utilities sector’s trailing twelve months PE ratio, which stands at 15.54. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that E.ON SE has a forward PE ratio (price relative to this year’s earnings) of 13.26, so it is fair to expect an increase in the company’s share price in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, E.ON SE has a P/S ratio of about 0.18. This is significantly lower than the S&P 500 average, which comes in at 3.17 right now. Also, as we can see in the chart below, this is below the highs for this stock in particular over the past few years.
E.ON SE is actually trading around the median level of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, E.ON SE currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes E.ON SE a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, its P/CF ratio (another great indicator of value) comes in at 1.87, which is much better than the industry average of 7.09. Clearly, E.ON SE is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though E.ON SE might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘B’ and a Momentum score of ‘F’. This gives E.ON SE a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The full-year 2016 has seen one estimate go higher in the past sixty days and one lower, while the full-year 2017 estimate has also seen a similar trend.
However, this has had a considerable impact on the consensus estimate, as the full-year 2016 consensus estimate fell 19.6% in the past two months, while the full-year 2017 estimate declined 3.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
E.ON SE Price and Consensus
E.ON SE Price and Consensus | E.ON SE Quote
This bearish trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
E.ON SE is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (bottom 46% out of more than 250 industries) and a Zacks Rank #3, it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Utility-Electric Power sector has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 "Strong Buy" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 "Strong Sells" and other private research. See these stocks free >>