Back to top

Image: Bigstock

KEP vs. EDPFY: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Utility - Electric Power stocks have likely encountered both Korea Electric Power (KEP - Free Report) and Energias de Portugal (EDPFY - Free Report) . 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.

There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.

Currently, Korea Electric Power has a Zacks Rank of #2 (Buy), while Energias de Portugal has a Zacks Rank of #5 (Strong Sell). Investors should feel comfortable knowing that KEP likely has seen a stronger improvement to its earnings outlook than EDPFY has recently. But this is just one piece of the puzzle for value investors.

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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

KEP currently has a forward P/E ratio of 7.23, while EDPFY has a forward P/E of 19.42. We also note that KEP has a PEG ratio of 1.45. 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. EDPFY currently has a PEG ratio of 3.12.

Another notable valuation metric for KEP is its P/B ratio of 0.23. 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, EDPFY has a P/B of 1.54.

These metrics, and several others, help KEP earn a Value grade of A, while EDPFY has been given a Value grade of C.

KEP stands above EDPFY thanks to its solid earnings outlook, and based on these valuation figures, we also feel that KEP is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Korea Electric Power Corporation (KEP) - free report >>

Energias de Portugal (EDPFY) - free report >>

Published in