Investors interested in stocks from the Alternative Energy – Other sector have probably already heard of Equinor (EQNR) and Ormat Technologies (ORA). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
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 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.
Both Equinor and Ormat Technologies have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
EQNR currently has a forward P/E ratio of 21.55, while ORA has a forward P/E of 42.65. We also note that EQNR has a PEG ratio of 3.73. 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 3.88.
Another notable valuation metric for EQNR is its P/B ratio of 1.31. 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 2.36.
These metrics, and several others, help EQNR earn a Value grade of A, while ORA has been given a Value grade of D.
Both EQNR and ORA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EQNR is the superior value option right now.
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