Investors interested in stocks from the Alternative Energy - Other sector have probably already heard of Ameresco (AMRC) and Talen Energy Corporation (TLN). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Currently, Ameresco has a Zacks Rank of #1 (Strong Buy), while Talen Energy Corporation has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that AMRC likely has seen a stronger improvement to its earnings outlook than TLN has recently. However, value investors will care about much more than just this.
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.
AMRC currently has a forward P/E ratio of 19.04, while TLN has a forward P/E of 51.78. We also note that AMRC has a PEG ratio of 0.76. 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. TLN currently has a PEG ratio of 9.94.
Another notable valuation metric for AMRC is its P/B ratio of 0.81. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, TLN has a P/B of 11.
These are just a few of the metrics contributing to AMRC's Value grade of A and TLN's Value grade of C.
AMRC stands above TLN thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AMRC is the superior value option right now.
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Ameresco, Inc. (AMRC): Free Stock Analysis Report Talen Energy Corporation (TLN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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