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NRG or OGE: Which Is the Better Value Stock Right Now?
Investors interested in Utility - Electric Power stocks are likely familiar with NRG Energy (NRG - Free Report) and OGE Energy (OGE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, NRG Energy is sporting a Zacks Rank of #2 (Buy), while OGE Energy has a Zacks Rank of #3 (Hold). This means that NRG's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
NRG currently has a forward P/E ratio of 2.87, while OGE has a forward P/E of 18.58. We also note that NRG has a PEG ratio of 0.24. 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. OGE currently has a PEG ratio of 3.72.
Another notable valuation metric for NRG is its P/B ratio of 1.48. 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, OGE has a P/B of 1.80.
Based on these metrics and many more, NRG holds a Value grade of A, while OGE has a Value grade of C.
NRG stands above OGE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that NRG is the superior value option right now.