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HE vs. MGEE: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Hawaiian Electric (HE) 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.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive 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.

Hawaiian Electric and MGE are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that HE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.

HE currently has a forward P/E ratio of 18.88, while MGEE has a forward P/E of 25.74. We also note that HE has a PEG ratio of 2.60. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MGEE currently has a PEG ratio of 4.62.

Another notable valuation metric for HE is its P/B ratio of 1.87. 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 2.67.

These metrics, and several others, help HE earn a Value grade of B, while MGEE has been given a Value grade of D.

HE sticks out from MGEE in both our Zacks Rank and Style Scores models, so value investors will likely feel that HE is the better option right now.


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Hawaiian Electric Industries, Inc. (HE) : Free Stock Analysis Report
 
MGE Energy Inc. (MGEE) : Free Stock Analysis Report
 
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