Investors interested in Alternative Energy - Other stocks are likely familiar with Ormat Technologies (ORA) and GE Vernova (GEV). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Ormat Technologies and GE Vernova are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that ORA likely has seen a stronger improvement to its earnings outlook than GEV has recently. 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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
ORA currently has a forward P/E ratio of 34.22, while GEV has a forward P/E of 64.89. We also note that ORA has a PEG ratio of 3.42. 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. GEV currently has a PEG ratio of 3.60.
Another notable valuation metric for ORA is its P/B ratio of 1.68. 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, GEV has a P/B of 13.10.
These are just a few of the metrics contributing to ORA's Value grade of B and GEV's Value grade of D.
ORA stands above GEV thanks to its solid earnings outlook, and based on these valuation figures, we also feel that ORA is the superior value option right now.
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Ormat Technologies, Inc. (ORA): Free Stock Analysis Report GE Vernova Inc. (GEV): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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