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Are Investors Undervaluing Pattern Energy (PEGI) Right Now?


Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system’s “Value” category. Stocks with both “A” grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is Pattern Energy (PEGI). PEGI is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors will also notice that PEGI has a PEG ratio of 0.94. 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. PEGI’s industry has an average PEG of 2.12 right now. Over the past 52 weeks, PEGI’s PEG has been as high as 14.90 and as low as 0.68, with a median of 2.23.

We should also highlight that PEGI has a P/B ratio of 0.83. The P/B ratio pits a stock’s market value against its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 1.45. Over the past 12 months, PEGI’s P/B has been as high as 1.02 and as low as 0.71, with a median of 0.83.

Finally, our model also underscores that PEGI has a P/CF ratio of 5.05. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. PEGI’s P/CF compares to its industry’s average P/CF of 8.51. Over the past 52 weeks, PEGI’s P/CF has been as high as 10.59 and as low as 4.57, with a median of 5.98.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Pattern Energy is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PEGI feels like a great value stock at the moment.

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