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EIX or HE: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Edison International (EIX - Free Report) and Hawaiian Electric (HE - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Edison International has a Zacks Rank of #2 (Buy), while Hawaiian Electric has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that EIX likely has seen a stronger improvement to its earnings outlook than HE has recently. But this is only part of the picture for value investors.
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.
EIX currently has a forward P/E ratio of 14.32, while HE has a forward P/E of 18.86. We also note that EIX has a PEG ratio of 5.57. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. HE currently has a PEG ratio of 7.34.
Another notable valuation metric for EIX is its P/B ratio of 1.70. 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, HE has a P/B of 2.15.
These metrics, and several others, help EIX earn a Value grade of B, while HE has been given a Value grade of C.
EIX has seen stronger estimate revision activity and sports more attractive valuation metrics than HE, so it seems like value investors will conclude that EIX is the superior option right now.