Investors interested in Alternative Energy – Other stocks are likely familiar with Chesapeake Energy (CHK) and Ameresco (AMRC). But which of these two stocks is more attractive to value investors? We’ll need to take a closer look to find out.
We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, Chesapeake Energy has a Zacks Rank of #2 (Buy), while Ameresco has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that CHK has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
CHK currently has a forward P/E ratio of 8.50, while AMRC has a forward P/E of 44.02. We also note that CHK has a PEG ratio of 1.36. 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. AMRC currently has a PEG ratio of 1.71.
Another notable valuation metric for CHK is its P/B ratio of 1.84. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. For comparison, AMRC has a P/B of 6.09.
Based on these metrics and many more, CHK holds a Value grade of A, while AMRC has a Value grade of D.
CHK stands above AMRC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that CHK is the superior value option right now.
7 Best Stocks for the Next 30 Days
Just released: Experts distill 7 elite stocks from the current list of 220 Zacks Rank #1 Strong Buys. They deem these tickers “Most Likely for Early Price Pops.”
Since 1988, the full list has beaten the market more than 2X over with an average gain of +25.4% per year. So be sure to give these hand-picked 7 your immediate attention.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days.
Click to get this free report