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 is more attractive to value investors? We'll need to take a closer look to find out.
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, both DTE Energy and American Electric Power are sporting a Zacks Rank of # 2 (Buy). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. 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 21.31, while AEP has a forward P/E of 22.78. We also note that DTE has a PEG ratio of 3.55. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. AEP currently has a PEG ratio of 4.02.
Another notable valuation metric for DTE is its P/B ratio of 2.30. 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 2.39.
These are just a few of the metrics contributing to DTE's Value grade of B and AEP's Value grade of C.
Both DTE and AEP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DTE is the superior value 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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