Back to top

Image: Bigstock

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

Read MoreHide Full Article

Investors interested in Utility - Electric Power stocks are likely familiar with Energias de Portugal (EDPFY - Free Report) and OGE Energy (OGE - 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.

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 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.

Energias de Portugal and OGE Energy are sporting Zacks Ranks of #2 (Buy) and #4 (Sell), respectively, right now. This means that EDPFY'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 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.

EDPFY currently has a forward P/E ratio of 13.84, while OGE has a forward P/E of 16.82. We also note that EDPFY has a PEG ratio of 3.27. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. OGE currently has a PEG ratio of 4.85.

Another notable valuation metric for EDPFY is its P/B ratio of 1.03. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, OGE has a P/B of 1.88.

Based on these metrics and many more, EDPFY holds a Value grade of B, while OGE has a Value grade of D.

EDPFY sticks out from OGE in both our Zacks Rank and Style Scores models, so value investors will likely feel that EDPFY is the better option right now.


See More Zacks Research for These Tickers


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


OGE Energy Corporation (OGE) - free report >>

Energias de Portugal (EDPFY) - free report >>

Published in