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XEL vs. AEP: Which Stock Should Value Investors Buy Now?

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Investors interested in Utility - Electric Power stocks are likely familiar with Xcel Energy (XEL - Free Report) and American Electric Power (AEP - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

Both Xcel Energy and American Electric Power have a Zacks Rank of # 2 (Buy) right now. This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

XEL currently has a forward P/E ratio of 18.02, while AEP has a forward P/E of 18.09. We also note that XEL has a PEG ratio of 2.82. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. AEP currently has a PEG ratio of 2.90.

Another notable valuation metric for XEL is its P/B ratio of 1.99. 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, AEP has a P/B of 2.06.

These are just a few of the metrics contributing to XEL's Value grade of B and AEP's Value grade of C.

Both XEL and AEP 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 report >>

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