Investors interested in Alternative Energy - Other stocks are likely familiar with Clearway Energy (CWENA) and GE Vernova (GEV). 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.
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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Clearway Energy has a Zacks Rank of #2 (Buy), while GE Vernova has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CWENA is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
CWENA currently has a forward P/E ratio of 16.48, while GEV has a forward P/E of 56.27. We also note that CWENA has a PEG ratio of 0.42. 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. GEV currently has a PEG ratio of 3.13.
Another notable valuation metric for CWENA is its P/B ratio of 0.87. 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, GEV has a P/B of 9.24.
These metrics, and several others, help CWENA earn a Value grade of A, while GEV has been given a Value grade of D.
CWENA has seen stronger estimate revision activity and sports more attractive valuation metrics than GEV, so it seems like value investors will conclude that CWENA is the superior option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
