Investors looking for stocks in the Utility - Electric Power sector might want to consider either Exelon (EXC) or NextEra Energy (NEE). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Exelon and NextEra Energy are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that EXC is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
EXC currently has a forward P/E ratio of 15.80, while NEE has a forward P/E of 19.64. We also note that EXC has a PEG ratio of 2.46. 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. NEE currently has a PEG ratio of 2.54.
Another notable valuation metric for EXC is its P/B ratio of 1.54. 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, NEE has a P/B of 2.46.
Based on these metrics and many more, EXC holds a Value grade of B, while NEE has a Value grade of D.
EXC stands above NEE thanks to its solid earnings outlook, and based on these valuation figures, we also feel that EXC is the superior value option right now.
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Exelon Corporation (EXC): Free Stock Analysis Report NextEra Energy, Inc. (NEE): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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