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AES vs. IDA: Which Stock Should Value Investors Buy Now?

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Investors interested in Utility - Electric Power stocks are likely familiar with AES (AES - Free Report) and IdaCorp (IDA - 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.

Both AES and IdaCorp 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 just one factor that value investors are interested in.

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.

AES currently has a forward P/E ratio of 11.93, while IDA has a forward P/E of 22.72. We also note that AES has a PEG ratio of 1.52. 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. IDA currently has a PEG ratio of 5.93.

Another notable valuation metric for AES is its P/B ratio of 1.87. 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, IDA has a P/B of 2.14.

Based on these metrics and many more, AES holds a Value grade of A, while IDA has a Value grade of D.

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


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