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CWEN vs. ORA: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Alternative Energy - Other stocks have likely encountered both NRG Yield (CWEN - Free Report) and Ormat Technologies (ORA - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Currently, NRG Yield has 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. But this is just one factor that value investors are interested in.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

CWEN currently has a forward P/E ratio of 13.41, while ORA has a forward P/E of 39.76. We also note that CWEN has a PEG ratio of 1.34. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. ORA currently has a PEG ratio of 3.61.

Another notable valuation metric for CWEN is its P/B ratio of 2.08. 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, ORA has a P/B of 2.92.

Based on these metrics and many more, CWEN holds a Value grade of A, while ORA has 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.


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