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VST vs. SO: Which Stock Is the Better Value Option?

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Investors with an interest in Utility - Electric Power stocks have likely encountered both Vistra Energy Corp. (VST - Free Report) and Southern Co. (SO - 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.

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 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.

Vistra Energy Corp. and Southern Co. are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that VST's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

VST currently has a forward P/E ratio of 7.70, while SO has a forward P/E of 17.79. We also note that VST has a PEG ratio of 0.41. 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. SO currently has a PEG ratio of 4.45.

Another notable valuation metric for VST is its P/B ratio of 1.24. 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, SO has a P/B of 1.86.

These are just a few of the metrics contributing to VST's Value grade of A and SO's Value grade of C.

VST stands above SO thanks to its solid earnings outlook, and based on these valuation figures, we also feel that VST is the superior value option right now.


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