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Is Centrais Eltricas Brasileiras (EBR) Stock Undervalued Right Now?

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Centrais Eltricas Brasileiras (EBR - Free Report) . EBR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.94 right now. For comparison, its industry sports an average P/E of 15.60. Over the past year, EBR's Forward P/E has been as high as 20.56 and as low as 6.81, with a median of 10.17.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. EBR has a P/S ratio of 1.89. This compares to its industry's average P/S of 2.16.

Finally, we should also recognize that EBR has a P/CF ratio of 8.17. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.82. Over the past 52 weeks, EBR's P/CF has been as high as 8.45 and as low as 4.75, with a median of 6.28.

If you're looking for another solid Utility - Electric Power value stock, take a look at RWE AG (RWEOY - Free Report) . RWEOY is a # 2 (Buy) stock with a Value score of A.

RWE AG is trading at a forward earnings multiple of 11.84 at the moment, with a PEG ratio of 2.65. This compares to its industry's average P/E of 15.60 and average PEG ratio of 2.18.

Over the past year, RWEOY's P/E has been as high as 20.53, as low as 11.84, with a median of 18.01; its PEG ratio has been as high as 4.53, as low as 2.65, with a median of 0.52 during the same time period.

Additionally, RWE AG has a P/B ratio of 2.14 while its industry's price-to-book ratio sits at 2.54. For RWEOY, this valuation metric has been as high as 2.48, as low as 0.88, with a median of 1.29 over the past year.

Value investors will likely look at more than just these metrics, but the above data helps show that Centrais Eltricas Brasileiras and RWE AG are likely undervalued currently. And when considering the strength of its earnings outlook, EBR and RWEOY sticks out as one of the market's strongest value stocks.


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