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PAM or SO: Which Is the Better Value Stock Right Now?

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Investors interested in Utility - Electric Power stocks are likely familiar with Pampa Energia (PAM - Free Report) and Southern Co. (SO - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Pampa Energia and Southern Co. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PAM has an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

PAM currently has a forward P/E ratio of 3.18, while SO has a forward P/E of 16.58. We also note that PAM has a PEG ratio of 0.49. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. SO currently has a PEG ratio of 4.15.

Another notable valuation metric for PAM is its P/B ratio of 0.28. 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, SO has a P/B of 1.73.

Based on these metrics and many more, PAM holds a Value grade of A, while SO has a Value grade of C.

PAM stands above SO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that PAM is the superior value option right now.


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