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Public Service Enterprise Group Incorporated (PEG) - free report >>
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Public Service Enterprise Group Incorporated (PEG) - free report >>
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PNW vs. PEG: Which Stock Is the Better Value Option?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Pinnacle West (PNW - Free Report) and PSEG (PEG - Free Report) . 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.
Pinnacle West has a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PNW has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
PNW currently has a forward P/E ratio of 14.65, while PEG has a forward P/E of 17.03. We also note that PNW has a PEG ratio of 4.79. 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. PEG currently has a PEG ratio of 4.91.
Another notable valuation metric for PNW is its P/B ratio of 1.41. 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, PEG has a P/B of 1.94.
Based on these metrics and many more, PNW holds a Value grade of B, while PEG has a Value grade of C.
PNW is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PNW is likely the superior value option right now.