Which stock currently offers the better value?

Investors interested in stocks in the Utilities – Electricity sector have probably heard of FirstEnergy (FE) and NextEra Energy (NEE). But which of these two stocks currently offers investors the better value opportunity? Let’s take a closer look.

We have found that the best way to discover great value opportunities is to combine a strong Zacks Rank with an outstanding 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.

Currently, FirstEnergy has a Zacks Rank of #2 (Buy), while NextEra Energy has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive earnings estimate revisions, so investors can be confident that FE has an improving earnings outlook. But that’s just one factor that value investors care about.

Value investors analyze a variety of traditional and proven metrics to find companies that they believe are undervalued at their current share price levels.

Our Value category highlights undervalued companies by looking at a number of key metrics, including the popular P/E ratio, as well as P/S, earnings yield, cash flow per share, and a number of other fundamental metrics that value investors have used for years.

FE currently has a forward P/E ratio of 14.69, while NEE has a forward P/E ratio of 22.34. We also note that FE has a PEG ratio of 2.50. 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. NEE currently has a PEG ratio of 2.60.

Another important valuation metric for FE is its P/B ratio of 1.67. P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. For comparison, NEE has a P/B ratio of 2.65.

These are just some of the key figures that contribute to the B rating for FE and the D rating for NEE.

FE currently has an improving earnings outlook, which makes it stand out in our Zacks Rank model. And based on the valuation metrics mentioned above, we believe FE is probably the better value option right now.

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FirstEnergy Corporation (FE): Free Stock Analysis Report

NextEra Energy, Inc. (NEE): Free Stock Analysis Report

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