Investors interested in stocks from the Alternative Energy – Other sector have probably already heard of Clearway Energy (CWEN) and Vestas Wind Systems AS (VWDRY). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Clearway Energy has a Zacks Rank of #2 (Buy), while Vestas Wind Systems AS has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CWEN has an improving earnings 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.
CWEN currently has a forward P/E ratio of 15.25, while VWDRY has a forward P/E of 111.35. We also note that CWEN has a PEG ratio of 1.52. 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. VWDRY currently has a PEG ratio of 2.22.
Another notable valuation metric for CWEN is its P/B ratio of 1.49. 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, VWDRY has a P/B of 7.79.
Based on these metrics and many more, CWEN holds a Value grade of B, while VWDRY has a Value grade of D.
CWEN stands above VWDRY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CWEN is the superior value option right now.
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