Investors interested in stocks from the Utility - Electric Power sector have probably already heard of DTE Energy (DTE) and American Electric Power (AEP). But which of these two stocks presents investors with the better value opportunity right now? 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
DTE Energy has a Zacks Rank of #2 (Buy), while American Electric Power has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DTE is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.
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.
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.
DTE currently has a forward P/E ratio of 20.61, while AEP has a forward P/E of 21.66. We also note that DTE has a PEG ratio of 3.43. 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 3.82.
Another notable valuation metric for DTE is its P/B ratio of 2.12. 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, AEP has a P/B of 2.30.
Based on these metrics and many more, DTE holds a Value grade of B, while AEP has a Value grade of D.
DTE sticks out from AEP 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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DTE Energy Company (DTE) : Free Stock Analysis Report
American Electric Power Company, Inc. (AEP) : Free Stock Analysis Report
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