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Is Exelon (EXC) a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Exelon Corporation (EXC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Exelon Corporation has a trailing twelve months PE ratio of 13.28, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.12. If we focus on the stock’s long-term PE trend, the current level puts Exelon’s current PE ratio tad above its midpoint over the past five years, with the number having trended upwards, over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Utility-Electric Power sector’s trailing twelve months PE ratio, which stands at 15.55. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Exelon has a forward PE ratio (price relative to this year’s earnings) of just 13.41, which is roughly inline with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Exelon has a P/S ratio of about 1.05. This is a bit lower than the S&P 500 average, which comes in at 3.17 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, EXC is roughly in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Exelon currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Exelon a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio of Exelon (another great indicator of value) comes in at 3.70, which is lower than the industry average of 7.09. Clearly, EXC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Exelon might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives EXC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while the full year estimate has seen six up and one down in the same time period.
This has had a modest impact on the consensus estimate though as the current quarter consensus estimate has dropped 10.9% in the past two months, while the full year estimate has decreased 2.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This somewhat dismal trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Exelon is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among bottom 45%) and a Zacks Rank #3, it is hard to get too excited about this company overall.
In fact, over the past two years, the Zacks Utility-Electric Power has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Exelon (EXC) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Exelon Corporation (EXC - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Exelon Corporation has a trailing twelve months PE ratio of 13.28, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.12. If we focus on the stock’s long-term PE trend, the current level puts Exelon’s current PE ratio tad above its midpoint over the past five years, with the number having trended upwards, over the past few months.
Further, the stock’s PE also compares favorably with the Zacks classified Utility-Electric Power sector’s trailing twelve months PE ratio, which stands at 15.55. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Exelon has a forward PE ratio (price relative to this year’s earnings) of just 13.41, which is roughly inline with the current level. Hence the forward earnings estimates are already incorporated in the company’s current share price.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Exelon has a P/S ratio of about 1.05. This is a bit lower than the S&P 500 average, which comes in at 3.17 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
If anything, EXC is roughly in the lower end of its range in the time period from a P/S metric, suggesting some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
In aggregate, Exelon currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Exelon a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the P/CF ratio of Exelon (another great indicator of value) comes in at 3.70, which is lower than the industry average of 7.09. Clearly, EXC is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Exelon might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘A’. This gives EXC a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen one estimate go higher in the past sixty days compared to one lower, while the full year estimate has seen six up and one down in the same time period.
This has had a modest impact on the consensus estimate though as the current quarter consensus estimate has dropped 10.9% in the past two months, while the full year estimate has decreased 2.3%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Exelon Corporation Price and Consensus
Exelon Corporation Price and Consensus | Exelon Corporation Quote
This somewhat dismal trend is why the stock has just a Zacks Rank #3 (Hold) and why we are looking for in-line performance from the company in the near term.
Bottom Line
Exelon is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among bottom 45%) and a Zacks Rank #3, it is hard to get too excited about this company overall.
In fact, over the past two years, the Zacks Utility-Electric Power has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for estimates and analyst sentiment to turn around in this name first, but once that happens, this stock could be a compelling pick.
The Best Place to Start Your Stock Search
Today, you are invited to download the full list of 220 Zacks Rank #1 ""Strong Buy"" stocks – absolutely free of charge. Since 1988, Zacks Rank #1 stocks have nearly tripled the market, with average gains of +26% per year. Plus, you can access the list of portfolio-killing Zacks Rank #5 ""Strong Sells"" and other private research. See these stocks free >>