Yahoo Finance PNW vs. OGE: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Pinnacle West (PNW) and OGE Energy (OGE). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Pinnacle West has a Zacks Rank of #2 (Buy), while OGE Energy has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that PNW likely has seen a stronger improvement to its earnings outlook than OGE has recently. But this is just one factor that value investors are interested in.
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.
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.
PNW currently has a forward P/E ratio of 16.16, while OGE has a forward P/E of 16.60. We also note that PNW has a PEG ratio of 1.97. 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. OGE currently has a PEG ratio of 3.32.
Another notable valuation metric for PNW is its P/B ratio of 1.39. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, OGE has a P/B of 1.59.
These metrics, and several others, help PNW earn a Value grade of B, while OGE has been given 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.
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Pinnacle West Capital Corporation (PNW) : Free Stock Analysis Report
OGE Energy Corporation (OGE) : Free Stock Analysis Report
