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EXC or WEC: Which Is the Better Value Stock Right Now?
Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Exelon (EXC - Free Report) and WEC Energy Group (WEC - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Exelon is sporting a Zacks Rank of #2 (Buy), while WEC Energy Group has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that EXC likely has seen a stronger improvement to its earnings outlook than WEC has recently. But this is only part of the picture 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.
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.
EXC currently has a forward P/E ratio of 16.46, while WEC has a forward P/E of 17.23. We also note that EXC has a PEG ratio of 2.61. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. WEC currently has a PEG ratio of 2.99.
Another notable valuation metric for EXC is its P/B ratio of 1.52. 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, WEC has a P/B of 2.07.
Based on these metrics and many more, EXC holds a Value grade of B, while WEC has a Value grade of C.
EXC has seen stronger estimate revision activity and sports more attractive valuation metrics than WEC, so it seems like value investors will conclude that EXC is the superior option right now.