Investors interested in Utility - Electric Power stocks are likely familiar with Energias de Portugal (EDPFY) and Exelon (EXC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Energias de Portugal and Exelon are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that EDPFY likely has seen a stronger improvement to its earnings outlook than EXC has recently. But this is only part of the picture 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 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.
EDPFY currently has a forward P/E ratio of 15.01, while EXC has a forward P/E of 17.12. We also note that EDPFY has a PEG ratio of 1.23. 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. EXC currently has a PEG ratio of 2.56.
Another notable valuation metric for EDPFY is its P/B ratio of 1.18. 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, EXC has a P/B of 1.60.
Based on these metrics and many more, EDPFY holds a Value grade of B, while EXC has a Value grade of C.
EDPFY sticks out from EXC in both our Zacks Rank and Style Scores models, so value investors will likely feel that EDPFY is the better option right now.
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