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

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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 is more attractive to value investors? We'll need to take a closer look to find out.

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.

AES and Unitil are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that AES likely has seen a stronger improvement to its earnings outlook than UTL has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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 11.60, while UTL has a forward P/E of 27.32. We also note that AES has a PEG ratio of 1.37. 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 6.27.

Another notable valuation metric for AES is its P/B ratio of 1.88. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, UTL has a P/B of 2.54.

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

AES stands above UTL thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AES is the superior value option right now.


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