Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Xcel Energy (XEL) and CenterPoint Energy (CNP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Xcel Energy and CenterPoint Energy are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its 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.

XEL currently has a forward P/E ratio of 17.46, while CNP has a forward P/E of 18.69. We also note that XEL has a PEG ratio of 2.53. 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. CNP currently has a PEG ratio of 2.62.

Another notable valuation metric for XEL is its P/B ratio of 1.98. 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, CNP has a P/B of 2.01.

These metrics, and several others, help XEL earn a Value grade of B, while CNP has been given a Value grade of C.

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

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Xcel Energy Inc. (XEL) : Free Stock Analysis Report

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