Which stock currently offers the better value?

Investors looking for stocks in the Utilities – Electricity sector should consider either Huaneng Power (HNP) or IdaCorp (IDA). But which of these two companies is the best option for those looking for undervalued stocks? Let’s take a closer look.

The best way to find great value stocks is to combine a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank highlights companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Huaneng Power has a Zacks Rank of #2 (Buy), while IdaCorp has a Zacks Rank of #3 (Hold). This system places emphasis on companies that have seen positive earnings estimate revisions, so investors can be confident that HNP’s earnings outlook is likely to improve on a larger scale. But that’s only one piece of the puzzle for value investors.

Value investors analyze a variety of traditional and proven metrics to find companies that they believe are undervalued at their current price levels.

Our Value category evaluates stocks using a number of key metrics, including the tried-and-true P/E, P/S, earnings yield and cash flow per share, as well as a number of other fundamental metrics commonly used by value investors.

HNP currently has a forward P/E ratio of 6.47, while IDA has a forward P/E ratio of 18.40. We also note that HNP has a PEG ratio of 0.49. This popular metric is similar to the widely known P/E ratio, with the difference that the PEG ratio also takes into account the company’s expected earnings growth rate. IDA currently has a PEG ratio of 6.99.

Another important valuation metric for HNP is its P/B ratio of 0.26. The P/B ratio is used to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. For comparison, IDA has a P/B ratio of 1.73.

These and several other metrics help HNP to achieve a grade of A, while IDA receives a grade of C.

HNP is experiencing more estimate revision activity and has more attractive valuation multiples than IDA, so value investors seem to be concluding that HNP is the better option at present.

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Huaneng Power International, Inc. (HNP): Free Stock Analysis Report

IDACORP, Inc. (IDA): Free Stock Analysis Report

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