Investors interested in Alternative Energy - Other stocks are likely familiar with NRG Yield (CWEN - Free Report) and Ormat Technologies (ORA - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, NRG Yield is sporting a Zacks Rank of #2 (Buy), while Ormat Technologies has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CWEN likely has seen a stronger improvement to its earnings outlook than ORA has recently. However, value investors will care about much more than just this.
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.
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.
CWEN currently has a forward P/E ratio of 13.01, while ORA has a forward P/E of 37.06. We also note that CWEN has a PEG ratio of 1.30. 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. ORA currently has a PEG ratio of 3.37.
Another notable valuation metric for CWEN is its P/B ratio of 2.02. 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 2.72.
These metrics, and several others, help CWEN earn a Value grade of A, while ORA has been given a Value grade of D.
CWEN is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that CWEN is likely the superior value option right now.