Investors interested in stocks from the Utility - Electric Power sector have probably already heard of Iberdrola S.A. (IBDRY) and WEC Energy Group (WEC). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Both Iberdrola S.A. and WEC Energy Group have 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. But this is just one factor that value investors are interested in.

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.

IBDRY currently has a forward P/E ratio of 14.63, while WEC has a forward P/E of 18.06. We also note that IBDRY has a PEG ratio of 1.75. 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. WEC currently has a PEG ratio of 2.39.

Another notable valuation metric for IBDRY is its P/B ratio of 1.26. The 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. By comparison, WEC has a P/B of 2.42.

Based on these metrics and many more, IBDRY holds a Value grade of B, while WEC has a Value grade of C.

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

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Iberdrola S.A. (IBDRY) : Free Stock Analysis Report

WEC Energy Group, Inc. (WEC) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research