Investors with an interest in Alternative Energy – Other stocks have likely encountered both Equinor (EQNR) and Ormat Technologies (ORA). But which of these two stocks presents investors with the better value opportunity right now? Let’s 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 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.
Currently, Equinor has a Zacks Rank of #2 (Buy), while Ormat Technologies has a Zacks Rank of #4 (Sell). This means that EQNR’s earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
EQNR currently has a forward P/E ratio of 12.53, while ORA has a forward P/E of 81.02. We also note that EQNR has a PEG ratio of 2.53. 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. ORA currently has a PEG ratio of 7.16.
Another notable valuation metric for EQNR is its P/B ratio of 1.76. 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 3.53.
These are just a few of the metrics contributing to EQNR’s Value grade of A and ORA’s Value grade of D.
EQNR sticks out from ORA in both our Zacks Rank and Style Scores models, so value investors will likely feel that EQNR is the better option right now.
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