EQNR or ORA: Which Is the Better Value Stock Right Now?
EQNR vs. ORA: Which Stock Is the Better Value Option?
Investors interested in Alternative Energy - Other stocks are likely familiar with Equinor (EQNR) and Ormat Technologies (ORA). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Equinor has a Zacks Rank of #1 (Strong Buy), while Ormat Technologies has a Zacks Rank of #3 (Hold) right now. This means that EQNR'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 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
EQNR currently has a forward P/E ratio of 8, while ORA has a forward P/E of 48.14. We also note that EQNR has a PEG ratio of 0.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. ORA currently has a PEG ratio of 3.61.
Another notable valuation metric for EQNR is its P/B ratio of 1.86. 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 2.03.
These metrics, and several others, help EQNR earn a Value grade of A, while ORA has been given a Value grade of C.
EQNR has seen stronger estimate revision activity and sports more attractive valuation metrics than ORA, so it seems like value investors will conclude that EQNR is the superior option right now.
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