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Public Service Enterprise Group Incorporated (PEG) - free report >>
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Public Service Enterprise Group Incorporated (PEG) - free report >>
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DTE vs. PEG: Which Stock Is the Better Value Option?
Investors interested in Utility - Electric Power stocks are likely familiar with DTE Energy (DTE - Free Report) and PSEG (PEG - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, DTE Energy has a Zacks Rank of #2 (Buy), while PSEG has a Zacks Rank of #4 (Sell). This means that DTE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle for value investors.
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.
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.
DTE currently has a forward P/E ratio of 15.84, while PEG has a forward P/E of 18.14. We also note that DTE has a PEG ratio of 2.64. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PEG currently has a PEG ratio of 2.91.
Another notable valuation metric for DTE is its P/B ratio of 1.98. 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, PEG has a P/B of 2.14.
Based on these metrics and many more, DTE holds a Value grade of B, while PEG has a Value grade of D.
DTE sticks out from PEG in both our Zacks Rank and Style Scores models, so value investors will likely feel that DTE is the better option right now.