Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 7 stocks made the list for top value stocks in the Utilities - Electric industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Latest Utilities - Electric Stock News

Before choosing which top Utilities - Electric stock to buy, be sure to conduct proper due diligence: analyze various financial metrics and look at historical data, public statements and news coverage.

The fundamental outlook of the industry over the next twelve months is neutral. The industry is predicted to experience negative effects from several near-term operating headwinds, but these are to be balanced out by record-level projections for capital spending that is expected to support earnings growth. Specifically, because many expect that U.S. will enter a recession in the near future, economic conditions such as housing starts and unemployment could begin to deteriorate, leading to slow growth in retail electric demand. According to the U.S. Energy Information Administration (EIA), annual residential electricity sales are forecasted to decline around 2% in 2023, while commercial and industrial sales growth is expected to be flat, as well as 2.2% growth in residential electric sales, near flat commercial sales growth, and around 1.2% growth in industrial sales for 2024. Furthermore, due to higher labor costs, higher supply, and increasing interest rates, operations and maintenance expenses and borrowing cost are expected to remain high or increase for debt-heavy industries such as the electric utilities industry. For these reasons, utilities are seeking regulatory assistance, for utilities without interim rate relief mechanisms, this situation can increase “regulatory lag” — the delay in time between when utilities make needed expenditures and when their regulators authorize new rates to recover the costs. Recent trends also indicate a stricter regulatory environment expected to continue in the near-term, which will see downward trends in authorized return on equity (ROE), a key driver of utility earnings. Data from Regulatory Research Associates (RRA) through December 27, 2022, shows that the average electric utility authorized ROE was 9.54%, somewhat above the 2021 full-year average of 9.38%. On the other hand, electric grid and gas main repairs and upgrades, investment in electric transmission infrastructure, and new clean power generation are projected to lead to record levels of capital expenditures. This should expand utility rate bases, provide opportunity for new rate increases, and allow utilities to tap into tax incentives for clean energy investments.

Why Focus on Undervalued Utilities - Electric Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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7 Undervalued Utilities - Electric Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 7 undervalued stocks in the Utilities - Electric industry for Wednesday, January 31, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Utilities - Electric industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Electriq Power Holdings Inc’s Value Grade

Value Grade:

Electriq Power Holdings, Inc. provides turnkey intelligent energy storage and management solutions for homes and small businesses. The Company’s solutions deliver clean energy, even during intermittent outages and inclement weather. The Company’s solutions enable cities, municipalities, and utilities to provide their constituents with a path to sustainable and resilient sources of energy.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Electriq Power Holdings Inc has a Value Score of 100, which is considered to be undervalued.

Electriq Power Holdings Inc’s price-earnings ratio is 6.80 compared to the industry median at 16.44. This means it has a lower share price relative to earnings compared to its peers. This could make Electriq Power Holdings Inc more attractive for value investors.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Electriq Power Holdings Inc’s shareholder yield is higher than its industry median ratio of 3.12%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Electriq Power Holdings Inc’s price-to-book ratio is lower than its industry median ratio of 1.46. This could make Electriq Power Holdings Inc more attractive to investors looking for a new addition to their portfolio.

Companhia Paranaense de Energia (ADR)’s Value Grade

Value Grade:

Companhia Paranaense de Energia, also known as Copel, is a Brazil-based electric utilities company. The Firm’s activities are divided into five segments: Power Generation and Transmission (GeT); Power Distribution and Sales (DiS); Telecommunications (TEL); Gas; and Holding (HOL). The GeT segment includes the generation of electric energy from hydraulic, wind and thermal projects; the transport and transformation of the power generated by the Company; and the construction, operation and maintenance of all power transmission substations and lines. The DiS segment is focused on the distribution and sale of electric energy, and the operation and maintenance of the distribution infrastructure. The TEL segment provides telecommunications services. The Gas segment is involved in the public service of piped natural gas distribution. The HOL segment consists of the participation in other companies. The Company operates in the state of Parana.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Companhia Paranaense de Energia (ADR) has a Value Score of 61, which is considered to be undervalued.

Companhia Paranaense de Energia (ADR)’s price-earnings ratio is 13.0 compared to the industry median at 16.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Companhia Paranaense de Energia (ADR) more attractive for value investors.

Companhia Paranaense de Energia (ADR)’s price-to-book ratio is higher than its peers. This could make Companhia Paranaense de Energia (ADR) less attractive for value investors when compared to the industry median at 1.46.

You can read more about Companhia Paranaense de Energia (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Entergy New Orleans LLC’s Value Grade

Value Grade:

Entergy New Orleans, LLC is an electric and gas utility company. The Company is engaged in the generation, transmission, distribution, and sale of electric power. The Company owns an 870 megawatt (mg) Michoud Plant generating station. Its Michoud Plant located in eastern New Orleans. The Company is also engaged in operating a natural gas distribution business.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Entergy New Orleans LLC has a Value Score of 100, which is considered to be undervalued.

Entergy New Orleans LLC’s price-earnings ratio is 2.9 compared to the industry median at 16.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Entergy New Orleans LLC more attractive for value investors.

Entergy New Orleans LLC’s price-to-book ratio is higher than its peers. This could make Entergy New Orleans LLC less attractive for value investors when compared to the industry median at 1.46.

You can read more about Entergy New Orleans LLC’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Evergy Inc’s Value Grade

Value Grade:

Evergy, Inc. (Evergy) is a utility holding company. The Company operates primarily through its wholly owned subsidiaries, Evergy Kansas Central, Inc. (Evergy Kansas Central), Evergy Metro, Inc. (Evergy Metro), Evergy Missouri West, Inc. (Evergy Missouri West), and Evergy Transmission Company, LLC (Evergy Transmission Company). Evergy Kansas Central is an integrated, regulated electric utility that provides electricity to customers in the state of Kansas. Evergy Metro is an integrated, regulated electric utility that provides electricity to customers in the states of Missouri and Kansas. Evergy Missouri West is an integrated, regulated electric utility that provides electricity to customers in the state of Missouri. Evergy Transmission Company owns 13.5% of Transource Energy, LLC with the remaining 86.5% owned by AEP Transmission Holding Company, LLC. Transource is focused on the development of electric transmission projects.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Evergy Inc has a Value Score of 61, which is considered to be undervalued.

Evergy Inc’s price-earnings ratio is 17.2 compared to the industry median at 16.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Evergy Inc less attractive for value investors.

Evergy Inc’s price-to-book ratio is higher than its peers. This could make Evergy Inc less attractive for value investors when compared to the industry median at 1.46.

You can read more about Evergy Inc’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Korea Electric Power Corp (ADR)’s Value Grade

Value Grade:

Korea Electric Power Corp is a Korea-based company principally engaged in the sale and delivery of electricity. The Company operates its business through four segments. The Electricity Sale Business segment is engaged in the sale and delivery of electricity and the development of power resources, among others. The Nuclear Power Business segment is engaged in the nuclear power, hydropower and pumped power generation business. The Thermal Power Business segment is engaged in power generation business such as bituminous coal, anthracite coal, liquefied natural gas (LNG) and others. The Other Business segment is involved in the design of power plants, the maintenance of power generation facilities, the supply of nuclear fuel, the provision of power information and communications technologies (ICT) services, the operation of renewable and solar power generation businesses, and the emission of greenhouse gases.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Korea Electric Power Corp (ADR) has a Value Score of 96, which is considered to be undervalued.

Korea Electric Power Corp (ADR)’s price-to-book ratio is higher than its peers. This could make Korea Electric Power Corp (ADR) less attractive for value investors when compared to the industry median at 1.46.

You can read more about Korea Electric Power Corp (ADR)’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Pinnacle West Capital Corporation’s Value Grade

Value Grade:

Pinnacle West Capital Corporation is a holding company that conducts business through its subsidiaries, Arizona Public Service Company (APS), El Dorado Investment Company (El Dorado), Bright Canyon Energy Corporation (BCE) and 4C Acquisition, LLC (4CA). The Company's business segment is its regulated electricity segment, which consists of traditional regulated retail and wholesale electricity businesses (primarily electric service to Native Load customers) and related activities, and includes electricity generation, transmission, and distribution. APS provides electric service to approximately 1.3 million customers. APS is also the operator and co-owner of Palo Verde, a primary source of electricity for the southwest United States and the nuclear power plant in the United States. El Dorado owns debt investments and minority interests in several energy-related investments and Arizona community-based ventures. BCE develops, owns, operates and acquires energy infrastructure.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Pinnacle West Capital Corporation has a Value Score of 61, which is considered to be undervalued.

Pinnacle West Capital Corporation’s price-earnings ratio is 18.2 compared to the industry median at 16.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Pinnacle West Capital Corporation less attractive for value investors.

Pinnacle West Capital Corporation’s price-to-book ratio is higher than its peers. This could make Pinnacle West Capital Corporation less attractive for value investors when compared to the industry median at 1.46.

You can read more about Pinnacle West Capital Corporation’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Vistra Corp’s Value Grade

Value Grade:

Vistra Corp. is a holding company, which operates an integrated retail and electric power generation business primarily in the United States. The Company has six segments: Retail, Texas, East, West, Sunset and Asset Closure. Retail segment represents its retail sales of electricity and natural gas to residential, small business and commercial and industrial customers. Texas segment represents its electricity generation operations in the ERCOT market. East segment represents its electricity generation operations in the Eastern Interconnection of the United States electric grid and includes operations in the PJM, ISO-NE and NYISO markets. West segment represents its electricity generation operations in the CAISO market, including its development of battery ESS projects at its Moss Landing power plant site. Sunset segment represents generation plants with announced retirement plans. Asset Closure segment is engaged in the decommissioning and reclamation of retired plants and mines.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Vistra Corp has a Value Score of 81, which is considered to be undervalued.

Vistra Corp’s price-earnings ratio is 12.1 compared to the industry median at 16.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Vistra Corp more attractive for value investors.

Vistra Corp’s price-to-book ratio is lower than its peers. This could make Vistra Corp more attractive for value investors when compared to the industry median at 1.46.

You can read more about Vistra Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Utilities - Electric Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Utilities - Electric stocks as well as other industrys.

Choosing Which of the 7 Best Utilities - Electric Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Electriq Power Holdings Inc stock has a Value Grade of A.
• Companhia Paranaense de Energia (ADR) stock has a Value Grade of B.
• Entergy New Orleans LLC stock has a Value Grade of A.
• Evergy Inc stock has a Value Grade of B.
• Korea Electric Power Corp (ADR) stock has a Value Grade of A.
• Pinnacle West Capital Corporation stock has a Value Grade of B.
• Vistra Corp stock has a Value Grade of A.

Now that you have a bit more background about each of the 7 undervalued stocks in the Utilities - Electric industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Utilities - Electric Stocks

Want to learn more about Utilities - Electric stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 7 Undervalued Utilities - Electric Stocks for Wednesday, January 31
• 6 Undervalued Utilities - Electric Stocks for Tuesday, January 30
• Why Altus Power Inc’s (AMPS) Stock Is Down 4.78%
• 3 Undervalued Utilities - Electric Stocks for Monday, January 29

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