Investors looking for stocks in the Utility - Electric Power sector might want to consider either Iberdrola S.A. (IBDRY) or OGE Energy (OGE). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Right now, Iberdrola S.A. is sporting a Zacks Rank of #2 (Buy), while OGE Energy has a Zacks Rank of #3 (Hold). This means that IBDRY's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
IBDRY currently has a forward P/E ratio of 17.93, while OGE has a forward P/E of 20.39. We also note that IBDRY has a PEG ratio of 2.45. 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. OGE currently has a PEG ratio of 3.23.
Another notable valuation metric for IBDRY is its P/B ratio of 1.91. 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, OGE has a P/B of 2.02.
These metrics, and several others, help IBDRY earn a Value grade of B, while OGE has been given a Value grade of C.
IBDRY stands above OGE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that IBDRY is the superior value option right now.
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Iberdrola S.A. (IBDRY): Free Stock Analysis Report OGE Energy Corporation (OGE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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