Investors looking for stocks in the Alternative Energy - Other sector might want to consider either Ameresco (AMRC - Free Report) or Evergy Inc (EVRG - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Ameresco has a Zacks Rank of #2 (Buy), while Evergy Inc 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 AMRC is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
AMRC currently has a forward P/E ratio of 17.41, while EVRG has a forward P/E of 22.09. We also note that AMRC has a PEG ratio of 0.99. 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. EVRG currently has a PEG ratio of 3.35.
Another notable valuation metric for AMRC is its P/B ratio of 1.65. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, EVRG has a P/B of 1.76.
These are just a few of the metrics contributing to AMRC's Value grade of B and EVRG's Value grade of C.
AMRC stands above EVRG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMRC is the superior value option right now.