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DTE vs. WEC: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Utility - Electric Power stocks have likely encountered both DTE Energy (DTE - 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.

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.

Right now, DTE Energy is sporting a Zacks Rank of #2 (Buy), while WEC Energy Group has a Zacks Rank of #4 (Sell). This means that DTE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

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.

DTE currently has a forward P/E ratio of 18.35, while WEC has a forward P/E of 18.57. We also note that DTE has a PEG ratio of 2.26. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WEC currently has a PEG ratio of 2.34.

Another notable valuation metric for DTE is its P/B ratio of 2.29. 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 2.32.

Based on these metrics and many more, DTE holds a Value grade of B, while WEC has a Value grade of D.

DTE sticks out from WEC in both our Zacks Rank and Style Scores models, so value investors will likely feel that DTE is the better option right now.


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