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

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Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Eletrobras (EBR - Free Report) and OGE Energy (OGE - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Eletrobras and OGE Energy are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

EBR currently has a forward P/E ratio of 9.92, while OGE has a forward P/E of 18.26. We also note that EBR has a PEG ratio of 0.70. 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. OGE currently has a PEG ratio of 5.26.

Another notable valuation metric for EBR is its P/B ratio of 0.85. 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, OGE has a P/B of 1.84.

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

Both EBR and OGE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EBR is the superior value option right now.


In-Depth Zacks Research for the Tickers Above


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OGE Energy Corporation (OGE) - free report >>

Centrais Eltricas Brasileiras SA (EBR) - free report >>

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