Subscribe to Entrepreneur for $5
Subscribe

PNW vs. PEG: Which Stock Is the Better Value Option?

PNW vs. PEG: Which Stock Is the Better Value Option?

By
This story originally appeared on Zacks

Investors with an interest in Utility - Electric Power stocks have likely encountered both Pinnacle West (PNW) and PSEG (PEG). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

- Zacks

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Pinnacle West has a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that PNW has an improving earnings outlook. But this is just one factor that value investors are interested in.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

PNW currently has a forward P/E ratio of 14.65, while PEG has a forward P/E of 17.03. We also note that PNW has a PEG ratio of 4.79. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. PEG currently has a PEG ratio of 4.91.

Another notable valuation metric for PNW is its P/B ratio of 1.41. 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, PEG has a P/B of 1.94.

Based on these metrics and many more, PNW holds a Value grade of B, while PEG has a Value grade of C.

PNW 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 PNW is likely the superior value option right now.



Zacks’ Top Picks to Cash in on Artificial Intelligence

This world-changing technology is projected to generate $100s of billions by 2025. From self-driving cars to consumer data analysis, people are relying on machines more than we ever have before. Now is the time to capitalize on the 4th Industrial Revolution. Zacks’ urgent special report reveals 6 AI picks investors need to know about today.

See 6 Artificial Intelligence Stocks With Extreme Upside Potential>>



Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

 

Pinnacle West Capital Corporation (PNW): Free Stock Analysis Report

 

Public Service Enterprise Group Incorporated (PEG): Free Stock Analysis Report

 

To read this article on Zacks.com click here.

 

Zacks Investment Research