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Investors with an interest in Alternative Energy - Other stocks have likely encountered both PNM Resources (TXNM) and Bloom Energy (BE). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
PNM Resources and Bloom Energy are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that TXNM is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
TXNM currently has a forward P/E ratio of 18.08, while BE has a forward P/E of 331.17. We also note that TXNM has a PEG ratio of 6.07. 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. BE currently has a PEG ratio of 13.25.
Another notable valuation metric for TXNM is its P/B ratio of 1.77. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, BE has a P/B of 12.85.
Based on these metrics and many more, TXNM holds a Value grade of A, while BE has a Value grade of D.
TXNM stands above BE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TXNM is the superior value option right now.
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TXNM Energy, Inc. (TXNM) : Free Stock Analysis Report
Bloom Energy Corporation (BE) : Free Stock Analysis Report