Investors with an interest in Utility - Electric Power stocks have likely encountered both NiSource (NI) and DTE Energy (DTE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.
NiSource has a Zacks Rank of #2 (Buy), while DTE Energy has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that NI likely has seen a stronger improvement to its earnings outlook than DTE has recently. But this is just one piece of the puzzle for value investors.
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 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.
NI currently has a forward P/E ratio of 17.99, while DTE has a forward P/E of 18.31. We also note that NI has a PEG ratio of 2.61. 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. DTE currently has a PEG ratio of 3.05.
Another notable valuation metric for NI is its P/B ratio of 1.80. 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, DTE has a P/B of 2.19.
These are just a few of the metrics contributing to NI's Value grade of B and DTE's Value grade of C.
NI sticks out from DTE in both our Zacks Rank and Style Scores models, so value investors will likely feel that NI is the better option right now.
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