Back to top

Image: Bigstock

ENGIY vs. PNW: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Utility - Electric Power sector might want to consider either GDF Suez SA (ENGIY - Free Report) or Pinnacle West (PNW - 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.

Currently, GDF Suez SA has a Zacks Rank of #2 (Buy), while Pinnacle West has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that ENGIY is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

ENGIY currently has a forward P/E ratio of 8.84, while PNW has a forward P/E of 19.99. We also note that ENGIY has a PEG ratio of 1.95. 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. PNW currently has a PEG ratio of 3.70.

Another notable valuation metric for ENGIY is its P/B ratio of 0.79. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, PNW has a P/B of 1.48.

These are just a few of the metrics contributing to ENGIY's Value grade of B and PNW's Value grade of C.

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

See More Zacks Research for These Tickers

Normally $25 each - click below to receive one report FREE:

Pinnacle West Capital Corporation (PNW) - free report >>

GDF Suez SA (ENGIY) - free report >>

Published in