Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Xcel Energy (XEL Quick QuoteXEL - Free Report) and PSEG (PEG Quick QuotePEG - 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.

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.

Right now, both Xcel Energy and PSEG are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

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.

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.

XEL currently has a forward P/E ratio of 16.51, while PEG has a forward P/E of 21.20. We also note that XEL has a PEG ratio of 2.58. 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. PEG currently has a PEG ratio of 3.08.

Another notable valuation metric for XEL is its P/B ratio of 1.83. 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, PEG has a P/B of 2.47.

These metrics, and several others, help XEL earn a Value grade of B, while PEG has been given a Value grade of C.

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