Investors looking for stocks in the Utility - Electric Power sector might want to consider either Exelon (EXC) or IdaCorp (IDA). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both Exelon and IdaCorp are holding a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their 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 15.03, while IDA has a forward P/E of 22.72. We also note that EXC has a PEG ratio of 3.28. 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. IDA currently has a PEG ratio of 8.17.
Another notable valuation metric for EXC is its P/B ratio of 1.36. 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, IDA has a P/B of 2.15.
These are just a few of the metrics contributing to EXC's Value grade of B and IDA's Value grade of C.
Both EXC and IDA are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EXC is the superior value option right now.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.