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Investors interested in stocks from the Utility - Electric Power sector have probably already heard of E.ON SE (EONGY) and MGE (MGEE). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Both E.ON SE and MGE have a Zacks Rank of # 2 (Buy) right now. 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. However, value investors will care about much more than just this.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
EONGY currently has a forward P/E ratio of 14.35, while MGEE has a forward P/E of 26.26. We also note that EONGY has a PEG ratio of 2.37. 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. MGEE currently has a PEG ratio of 4.42.
Another notable valuation metric for EONGY is its P/B ratio of 1.60. 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, MGEE has a P/B of 2.73.
These are just a few of the metrics contributing to EONGY's Value grade of A and MGEE's Value grade of D.
Both EONGY and MGEE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that EONGY is the superior value option right now.
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E.ON SE (EONGY) : Free Stock Analysis Report
MGE Energy Inc. (MGEE) : Free Stock Analysis Report
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