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

Zacks Equity Research
·2 min read

Investors interested in Utility - Electric Power stocks are likely familiar with Avangrid (AGR) and WEC Energy Group (WEC). 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 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, both Avangrid and WEC Energy Group are sporting a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

AGR currently has a forward P/E ratio of 18.61, while WEC has a forward P/E of 23.87. We also note that AGR has a PEG ratio of 3.38. 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 4.03.

Another notable valuation metric for AGR is its P/B ratio of 0.82. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, WEC has a P/B of 2.68.

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

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


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Avangrid, Inc. (AGR) : Free Stock Analysis Report
 
WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report
 
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Zacks Investment Research