DTE or SO: Which Is the Better Value Stock Right Now?
Investors interested in Utility - Electric Power stocks are likely familiar with DTE Energy (DTE) and Southern Co. (SO). 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, DTE Energy is sporting a Zacks Rank of #2 (Buy), while Southern Co. has a Zacks Rank of #3 (Hold). 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 only part of the picture for value investors.
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.
DTE currently has a forward P/E ratio of 16.13, while SO has a forward P/E of 16.68. We also note that DTE has a PEG ratio of 2.69. 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. SO currently has a PEG ratio of 4.17.
Another notable valuation metric for DTE is its P/B ratio of 2.02. 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, SO has a P/B of 2.07.
These metrics, and several others, help DTE earn a Value grade of B, while SO has been given a Value grade of C.
DTE sticks out from SO 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
Southern Company (The) (SO) : Free Stock Analysis Report
