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POR or AEP: Which Is the Better Value Stock Right Now?

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Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Portland General Electric (POR - Free Report) and American Electric Power (AEP - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Portland General Electric has a Zacks Rank of #2 (Buy), while American Electric Power has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that POR likely has seen a stronger improvement to its earnings outlook than AEP has recently. 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

POR currently has a forward P/E ratio of 17.81, while AEP has a forward P/E of 18.18. We also note that POR has a PEG ratio of 1.33. 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 3.19.

Another notable valuation metric for POR is its P/B ratio of 1.63. 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, AEP has a P/B of 2.02.

These metrics, and several others, help POR earn a Value grade of B, while AEP has been given a Value grade of C.

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


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