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EE vs. TLN: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Alternative Energy - Other sector might want to consider either Excelerate Energy (EE - Free Report) or Talen Energy Corporation (TLN - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Excelerate Energy has a Zacks Rank of #1 (Strong Buy), while Talen Energy Corporation has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EE is likely seeing its earnings outlook improve to a greater extent. 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.

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.

EE currently has a forward P/E ratio of 18.22, while TLN has a forward P/E of 25.41. We also note that EE has a PEG ratio of 0.94. 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. TLN currently has a PEG ratio of 3.41.

Another notable valuation metric for EE is its P/B ratio of 1.49. 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, TLN has a P/B of 7.46.

These are just a few of the metrics contributing to EE's Value grade of B and TLN's Value grade of C.

EE has seen stronger estimate revision activity and sports more attractive valuation metrics than TLN, so it seems like value investors will conclude that EE is the superior option right now.


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