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Edison International (EIX) - free report >>
Public Service Enterprise Group Incorporated (PEG) - free report >>
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Edison International (EIX) - free report >>
Public Service Enterprise Group Incorporated (PEG) - free report >>
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EIX vs. PEG: Which Stock Is the Better Value Option?
Investors looking for stocks in the Utility - Electric Power sector might want to consider either Edison International (EIX - Free Report) or PSEG (PEG - 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.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.
Right now, Edison International is sporting a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EIX has an improving earnings outlook. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
EIX currently has a forward P/E ratio of 15.67, while PEG has a forward P/E of 18.64. We also note that EIX has a PEG ratio of 4.02. 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. PEG currently has a PEG ratio of 4.30.
Another notable valuation metric for EIX is its P/B ratio of 1.82. 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, PEG has a P/B of 2.17.
These are just a few of the metrics contributing to EIX's Value grade of B and PEG's Value grade of C.
EIX is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that EIX is likely the superior value option right now.