Investors with an interest in Utility - Electric Power stocks have likely encountered both Portland General Electric (POR) and Fortis (FTS). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Currently, Portland General Electric has a Zacks Rank of #2 (Buy), while Fortis has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that POR likely has seen a stronger improvement to its earnings outlook than FTS has recently. However, value investors will care about much more than just this.
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.
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.
POR currently has a forward P/E ratio of 15.38, while FTS has a forward P/E of 20.86. We also note that POR has a PEG ratio of 4.53. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. FTS currently has a PEG ratio of 4.86.
Another notable valuation metric for POR is its P/B ratio of 1.41. 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, FTS has a P/B of 1.46.
These are just a few of the metrics contributing to POR's Value grade of B and FTS's Value grade of C.
POR 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 POR is likely the superior value option right now.
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Portland General Electric Company (POR): Free Stock Analysis Report Fortis (FTS): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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