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CWEN vs. ORA: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Alternative Energy - Other sector have probably already heard of Clearway Energy (CWEN - Free Report) and Ormat Technologies (ORA - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Clearway Energy is sporting a Zacks Rank of #2 (Buy), while Ormat Technologies 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 CWEN is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.

CWEN currently has a forward P/E ratio of 24.33, while ORA has a forward P/E of 35.99. We also note that CWEN has a PEG ratio of 0.64. 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. ORA currently has a PEG ratio of 3.60.

Another notable valuation metric for CWEN is its P/B ratio of 1.07. 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, ORA has a P/B of 1.71.

These metrics, and several others, help CWEN earn a Value grade of A, while ORA has been given a Value grade of C.

CWEN sticks out from ORA in both our Zacks Rank and Style Scores models, so value investors will likely feel that CWEN is the better option right now.


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Ormat Technologies, Inc. (ORA) - free report >>

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