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Public Service Enterprise Group Incorporated (PEG) - free report >>
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Public Service Enterprise Group Incorporated (PEG) - free report >>
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PAM or PEG: Which Is the Better Value Stock Right Now?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Pampa Energia (PAM - Free Report) and PSEG (PEG - Free Report) . 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Pampa Energia has a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that PAM likely has seen a stronger improvement to its earnings outlook than PEG has recently. 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.
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.
PAM currently has a forward P/E ratio of 4.45, while PEG has a forward P/E of 17.28. We also note that PAM has a PEG ratio of 0.13. 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. PEG currently has a PEG ratio of 3.78.
Another notable valuation metric for PAM is its P/B ratio of 0.58. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, PEG has a P/B of 2.21.
These are just a few of the metrics contributing to PAM's Value grade of A and PEG's Value grade of D.
PAM is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that PAM is likely the superior value option right now.