Investors interested in Utility - Electric Power stocks are likely familiar with OGE Energy (OGE) and American Electric Power (AEP). 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.
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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
OGE Energy and American Electric Power are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that OGE has an improving earnings outlook. But this is only part of the picture for value investors.
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.
OGE currently has a forward P/E ratio of 18.84, while AEP has a forward P/E of 19.59. We also note that OGE has a PEG ratio of 2.70. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AEP currently has a PEG ratio of 3.03.
Another notable valuation metric for OGE is its P/B ratio of 1.8. 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, AEP has a P/B of 1.97.
These metrics, and several others, help OGE earn a Value grade of B, while AEP has been given a Value grade of C.
OGE has seen stronger estimate revision activity and sports more attractive valuation metrics than AEP, so it seems like value investors will conclude that OGE is the superior option right now.
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OGE Energy Corporation (OGE): Free Stock Analysis Report American Electric Power Company, Inc. (AEP): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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