CSAN vs. TRP: Which Stock Is the Better Value Option?
Investors looking for stocks in the Alternative Energy - Other sector might want to consider either Cosan (CSAN) or TC Energy (TRP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Cosan is sporting a Zacks Rank of #2 (Buy), while TC Energy has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CSAN likely has seen a stronger improvement to its earnings outlook than TRP has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
CSAN currently has a forward P/E ratio of 6.95, while TRP has a forward P/E of 14.61. We also note that CSAN has a PEG ratio of 0.39. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TRP currently has a PEG ratio of 3.65.
Another notable valuation metric for CSAN is its P/B ratio of 1.38. 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, TRP has a P/B of 1.99.
These metrics, and several others, help CSAN earn a Value grade of A, while TRP has been given a Value grade of C.
CSAN has seen stronger estimate revision activity and sports more attractive valuation metrics than TRP, so it seems like value investors will conclude that CSAN is the superior option right now.
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
Cosan S.A. Sponsored ADR (CSAN) : Free Stock Analysis Report
TC Energy Corporation (TRP) : Free Stock Analysis Report
To read this article on Zacks.com click here.
Zacks Investment Research
