Investors with an interest in Alternative Energy – Other stocks have likely encountered both Clearway Energy (CWEN) and Ormat Technologies (ORA). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Clearway Energy and Ormat Technologies are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CWEN is likely seeing its earnings outlook improve to a greater extent. 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.
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.
CWEN currently has a forward P/E ratio of 31.76, while ORA has a forward P/E of 35.28. We also note that CWEN has a PEG ratio of 1.19. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company’s expected earnings growth rate. ORA currently has a PEG ratio of 3.53.
Another notable valuation metric for CWEN is its P/B ratio of 0.94. 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, ORA has a P/B of 1.65.
These metrics, and several others, help CWEN earn a Value grade of A, while ORA has been given a Value grade of C.
CWEN stands above ORA thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CWEN is the superior value option right now.
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Clearway Energy, Inc. (CWEN) : Free Stock Analysis Report
Ormat Technologies, Inc. (ORA) : Free Stock Analysis Report
This article was originally published here.
