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EIX vs. NEE: Which Stock Is the Better Value Option?

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Investors interested in Utility - Electric Power stocks are likely familiar with Edison International (EIX - Free Report) and NextEra Energy (NEE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 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.

Edison International has a Zacks Rank of #2 (Buy), while NextEra Energy has a Zacks Rank of #3 (Hold) right now. This means that EIX's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

EIX currently has a forward P/E ratio of 14.22, while NEE has a forward P/E of 23.47. We also note that EIX has a PEG ratio of 2.39. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NEE currently has a PEG ratio of 2.80.

Another notable valuation metric for EIX is its P/B ratio of 1.34. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NEE has a P/B of 2.34.

Based on these metrics and many more, EIX holds a Value grade of A, while NEE has a Value grade of D.

EIX has seen stronger estimate revision activity and sports more attractive valuation metrics than NEE, so it seems like value investors will conclude that EIX is the superior option right now.


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