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CWEN or ORA: Which Is the Better Value Stock Right Now?

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Investors with an interest in Alternative Energy - Other stocks have likely encountered both Clearway Energy (CWEN - Free Report) and Ormat Technologies (ORA - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Right now, Clearway Energy is sporting a Zacks Rank of #1 (Strong Buy), while Ormat Technologies has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CWEN likely has seen a stronger improvement to its earnings outlook than ORA has recently. But this is just one piece of the puzzle for value investors.

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.

CWEN currently has a forward P/E ratio of 17.04, while ORA has a forward P/E of 44.99. We also note that CWEN has a PEG ratio of 1.70. 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 4.50.

Another notable valuation metric for CWEN is its P/B ratio of 1.57. 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 2.37.

These are just a few of the metrics contributing to CWEN's Value grade of B and ORA's Value grade of C.

CWEN 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 CWEN is likely the superior value option right now.


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