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FE or NEE: Which Is the Better Value Stock Right Now?

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Investors interested in Utility - Electric Power stocks are likely familiar with FirstEnergy (FE - Free Report) and NextEra Energy (NEE - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both FirstEnergy and NextEra Energy have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

FE currently has a forward P/E ratio of 16.26, while NEE has a forward P/E of 24.99. We also note that FE has a PEG ratio of 2.52. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NEE currently has a PEG ratio of 2.76.

Another notable valuation metric for FE is its P/B ratio of 2.19. 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, NEE has a P/B of 3.21.

These are just a few of the metrics contributing to FE's Value grade of B and NEE's Value grade of D.

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


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