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CNP vs. MGEE: Which Stock Is the Better Value Option?

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Investors looking for stocks in the Utility - Electric Power sector might want to consider either CenterPoint Energy (CNP - Free Report) or MGE (MGEE - 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.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, CenterPoint Energy has a Zacks Rank of #2 (Buy), while MGE has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that CNP likely has seen a stronger improvement to its earnings outlook than MGEE has recently. But this is just one piece of the puzzle 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.

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.

CNP currently has a forward P/E ratio of 20.58, while MGEE has a forward P/E of 23.05. We also note that CNP has a PEG ratio of 2.94. 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. MGEE currently has a PEG ratio of 4.31.

Another notable valuation metric for CNP is its P/B ratio of 2.09. 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, MGEE has a P/B of 2.59.

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

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


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CenterPoint Energy, Inc. (CNP) - free report >>

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