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OTTR vs. NEE: Which Stock Should Value Investors Buy Now?

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Investors with an interest in Utility - Electric Power stocks have likely encountered both Otter Tail (OTTR) and NextEra Energy (NEE). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Both Otter Tail and NextEra Energy 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. 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

OTTR currently has a forward P/E ratio of 16.19, while NEE has a forward P/E of 32.50. We also note that OTTR has a PEG ratio of 3.44. 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. NEE currently has a PEG ratio of 3.91.

Another notable valuation metric for OTTR is its P/B ratio of 2.63. 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, NEE has a P/B of 3.57.

These are just a few of the metrics contributing to OTTR's Value grade of B and NEE's Value grade of D.

Both OTTR and NEE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that OTTR is the superior value option right now.


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Otter Tail Corporation (OTTR) : Free Stock Analysis Report
 
NextEra Energy, Inc. (NEE) : Free Stock Analysis Report
 
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