Investors with an interest in Utility - Electric Power stocks have likely encountered both Korea Electric Power (KEP) and WEC Energy Group (WEC). But which of these two stocks presents investors with the better value opportunity right now? Let's 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.
Korea Electric Power has a Zacks Rank of #2 (Buy), while WEC Energy Group has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that KEP likely has seen a stronger improvement to its earnings outlook than WEC has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
KEP currently has a forward P/E ratio of 3.37, while WEC has a forward P/E of 20.16. We also note that KEP has a PEG ratio of 0.06. 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. WEC currently has a PEG ratio of 2.71.
Another notable valuation metric for KEP is its P/B ratio of 0.8. 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, WEC has a P/B of 2.62.
These are just a few of the metrics contributing to KEP's Value grade of A and WEC's Value grade of D.
KEP sticks out from WEC in both our Zacks Rank and Style Scores models, so value investors will likely feel that KEP is the better option right now.
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Korea Electric Power Corporation (KEP): Free Stock Analysis Report WEC Energy Group, Inc. (WEC): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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