Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Duke Energy (DUK - Free Report) and IdaCorp (IDA - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Right now, Duke Energy is sporting a Zacks Rank of #2 (Buy), while IdaCorp has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DUK is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
DUK currently has a forward P/E ratio of 16.31, while IDA has a forward P/E of 19.98. We also note that DUK has a PEG ratio of 3.51. 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. IDA currently has a PEG ratio of 7.60.
Another notable valuation metric for DUK is its P/B ratio of 1.32. 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, IDA has a P/B of 1.85.
Based on these metrics and many more, DUK holds a Value grade of B, while IDA has a Value grade of D.
DUK sticks out from IDA in both our Zacks Rank and Style Scores models, so value investors will likely feel that DUK is the better option right now.