Investors with an interest in Utility - Electric Power stocks have likely encountered both PGE (POR - Free Report) and American Electric Power (AEP - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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.
PGE has a Zacks Rank of #2 (Buy), while American Electric Power has a Zacks Rank of #3 (Hold) right now. This means that POR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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.
POR currently has a forward P/E ratio of 18.42, while AEP has a forward P/E of 20.06. We also note that POR has a PEG ratio of 3.50. 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. AEP currently has a PEG ratio of 3.52.
Another notable valuation metric for POR is its P/B ratio of 1.50. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AEP has a P/B of 2.13.
These metrics, and several others, help POR earn a Value grade of B, while AEP has been given a Value grade of C.
POR has seen stronger estimate revision activity and sports more attractive valuation metrics than AEP, so it seems like value investors will conclude that POR is the superior option right now.