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Entergy Corporation (ETR) - free report >>
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Entergy Corporation (ETR) - free report >>
American Electric Power Company, Inc. (AEP) - free report >>
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ETR or AEP: Which Is the Better Value Stock Right Now?
Investors with an interest in Utility - Electric Power stocks have likely encountered both Entergy (ETR - Free Report) and American Electric Power (AEP - 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.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Entergy has a Zacks Rank of #2 (Buy), while American Electric Power has a Zacks Rank of #3 (Hold) right now. This means that ETR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
ETR currently has a forward P/E ratio of 17.95, while AEP has a forward P/E of 17.99. We also note that ETR has a PEG ratio of 2.45. 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. AEP currently has a PEG ratio of 2.88.
Another notable valuation metric for ETR is its P/B ratio of 1.90. 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, AEP has a P/B of 2.05.
Based on these metrics and many more, ETR holds a Value grade of B, while AEP has a Value grade of C.
ETR has seen stronger estimate revision activity and sports more attractive valuation metrics than AEP, so it seems like value investors will conclude that ETR is the superior option right now.