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AES vs. UTL: Which Stock Is the Better Value Option?

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Investors with an interest in Utility - Electric Power stocks have likely encountered both AES (AES - Free Report) and Unitil (UTL - 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.

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

AES and Unitil are both sporting a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have 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 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.

AES currently has a forward P/E ratio of 12.03, while UTL has a forward P/E of 26.90. We also note that AES has a PEG ratio of 1.42. 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. UTL currently has a PEG ratio of 6.17.

Another notable valuation metric for AES is its P/B ratio of 1.95. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, UTL has a P/B of 2.50.

These metrics, and several others, help AES earn a Value grade of A, while UTL has been given a Value grade of C.

Both AES and UTL 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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