EBR vs. ED: Which Stock Should Value Investors Buy Now?
Investors interested in Utility - Electric Power stocks are likely familiar with Eletrobras (EBR) and Consolidated Edison (ED). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Eletrobras and Consolidated Edison are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that EBR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
EBR currently has a forward P/E ratio of 19.23, while ED has a forward P/E of 22.27. We also note that EBR has a PEG ratio of 6.28. 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. ED currently has a PEG ratio of 11.13.
Another notable valuation metric for EBR is its P/B ratio of 0.96. 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, ED has a P/B of 1.72.
These are just a few of the metrics contributing to EBR's Value grade of B and ED's Value grade of C.
EBR sticks out from ED in both our Zacks Rank and Style Scores models, so value investors will likely feel that EBR is the better option right now.
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Centrais Eltricas Brasileiras SA (EBR) : Free Stock Analysis Report
Consolidated Edison Inc (ED) : Free Stock Analysis Report
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