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Are Investors Undervaluing PG&E (PCG) Right Now?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is PG&E (PCG - Free Report) . PCG is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 9.36. This compares to its industry's average Forward P/E of 15.26. Over the last 12 months, PCG's Forward P/E has been as high as 14.79 and as low as 8.28, with a median of 10.97.

Investors should also note that PCG holds a PEG ratio of 1.05. 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. PCG's PEG compares to its industry's average PEG of 1.28. Within the past year, PCG's PEG has been as high as 1.54 and as low as 0.88, with a median of 1.13.

Investors should also recognize that PCG has a P/B ratio of 1.34. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. PCG's current P/B looks attractive when compared to its industry's average P/B of 2.56. PCG's P/B has been as high as 2.09 and as low as 1.16, with a median of 1.54, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PCG has a P/S ratio of 1.35. This compares to its industry's average P/S of 2.51.

Finally, investors will want to recognize that PCG has a P/CF ratio of 4.89. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. PCG's P/CF compares to its industry's average P/CF of 12.79. Within the past 12 months, PCG's P/CF has been as high as 6.87 and as low as 4.26, with a median of 5.49.

Investors could also keep in mind Portland General Electric (POR - Free Report) , another Utility - Electric Power stock with a Zacks Rank of #2 (Buy) and Value grade of A.

Shares of Portland General Electric are currently trading at a forward earnings multiple of 12.86 and a PEG ratio of 3.79 compared to its industry's P/E and PEG ratios of 15.26 and 1.28, respectively.

POR's Forward P/E has been as high as 15.41 and as low as 12.04, with a median of 13.05. During the same time period, its PEG ratio has been as high as 4.08, as low as 1.03, with a median of 1.34.

Additionally, Portland General Electric has a P/B ratio of 1.22 while its industry's price-to-book ratio sits at 2.56. For POR, this valuation metric has been as high as 1.44, as low as 1.13, with a median of 1.21 over the past year.

These are only a few of the key metrics included in PG&E and Portland General Electric strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, PCG and POR look like an impressive value stock at the moment.


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