Back to top

XEL vs. EE: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Utility - Electric Power stocks are likely familiar with Xcel Energy (XEL - Free Report) and El Paso Electric (EE - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Currently, Xcel Energy has a Zacks Rank of #2 (Buy), while El Paso Electric has a Zacks Rank of #4 (Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that XEL has an improving earnings outlook. 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 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.

XEL currently has a forward P/E ratio of 19.05, while EE has a forward P/E of 24.14. We also note that XEL has a PEG ratio of 3.30. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. EE currently has a PEG ratio of 5.17.

Another notable valuation metric for XEL is its P/B ratio of 2.06. 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, EE has a P/B of 2.10.

These metrics, and several others, help XEL earn a Value grade of B, while EE has been given a Value grade of C.

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




In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Xcel Energy Inc. (XEL) - free report >>

El Paso Electric Company (EE) - free report >>

More from Zacks Tale of the Tape

You May Like