Back to top

Image: Bigstock

TRP vs. ORA: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Alternative Energy - Other sector might want to consider either TC Energy (TRP - Free Report) or 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

TC Energy has a Zacks Rank of #2 (Buy), while Ormat Technologies has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TRP is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture 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.

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.

TRP currently has a forward P/E ratio of 12.95, while ORA has a forward P/E of 37.57. We also note that TRP has a PEG ratio of 3.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ORA currently has a PEG ratio of 3.76.

Another notable valuation metric for TRP is its P/B ratio of 1.42. 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, ORA has a P/B of 1.83.

Based on these metrics and many more, TRP holds a Value grade of B, while ORA has a Value grade of C.

TRP 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 TRP is likely the superior value option right now.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


TC Energy Corporation (TRP) - free report >>

Ormat Technologies, Inc. (ORA) - free report >>

Published in