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FE or OGE: Which Is the Better Value Stock Right Now?
Investors looking for stocks in the Utility - Electric Power sector might want to consider either FirstEnergy (FE - Free Report) or OGE Energy (OGE - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both FirstEnergy and OGE Energy are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is only part of the picture 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.
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.
FE currently has a forward P/E ratio of 16.16, while OGE has a forward P/E of 19.23. We also note that FE has a PEG ratio of 2.30. 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. OGE currently has a PEG ratio of 3.67.
Another notable valuation metric for FE is its P/B ratio of 1.83. 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, OGE has a P/B of 1.85.
Based on these metrics and many more, FE holds a Value grade of B, while OGE has a Value grade of C.
Both FE and OGE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that FE is the superior value option right now.