Investors interested in Utility - Electric Power stocks are likely familiar with Korea Electric Power (KEP) and Unitil (UTL). 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.
Currently, Korea Electric Power has a Zacks Rank of #2 (Buy), while Unitil has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that KEP likely has seen a stronger improvement to its earnings outlook than UTL has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
KEP currently has a forward P/E ratio of 14.82, while UTL has a forward P/E of 23.32. We also note that KEP has a PEG ratio of 2.96. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. UTL currently has a PEG ratio of 5.07.
Another notable valuation metric for KEP is its P/B ratio of 0.25. 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, UTL has a P/B of 2.28.
These metrics, and several others, help KEP earn a Value grade of A, while UTL has been given a Value grade of C.
KEP is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that KEP is likely the superior value option right now.
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Korea Electric Power Corporation (KEP) : Free Stock Analysis Report
Unitil Corporation (UTL) : Free Stock Analysis Report
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