Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 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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6 Undervalued Utilities - Electric Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Utilities - Electric industry for Wednesday, February 07, 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.

Energy of Minas Gerais Co - ADR’s Value Grade

Value Grade:

Companhia Energetica de Minas Gerais CEMIG is a Brazil-based holding company engaged in the energy sector. The Company, through its interests in subsidiaries or jointly controlled entities, is engaged in the generation, transmission and distribution of electricity. The Generation division consists of the operation of hydroelectric plants, wind farms and photovoltaic plant. The electric power transmission business consists of transporting power from the facilities where it is generated to points of consumption, distribution networks and Free Consumers. Its distribution operation consists of transfers of electricity from distribution substations to final consumers. In addition, the Firm is also engaged in the natural gas distribution throughout the territory of the state of Minas Gerais.

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.

Energy of Minas Gerais Co - ADR has a Value Score of 91, which is considered to be undervalued.

When you look at Energy of Minas Gerais Co - ADR’s price-to-sales ratio at 0.68 compared to the industry median at 1.62, this company has a lower price relative to revenue compared to its peers. This could make Energy of Minas Gerais Co - ADR’s stock more attractive for value investors.

Energy of Minas Gerais Co - ADR’s price-earnings ratio is 4.71 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 Energy of Minas Gerais Co - ADR more attractive for value investors.

Now, let’s assess Energy of Minas Gerais Co - ADR’s EV/EBITDA ratio, also known as enterprise multiple. At 4.7, when compared to the industry median of 11.6, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

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. Energy of Minas Gerais Co - ADR’s shareholder yield is lower than its industry median ratio of 3.23%. 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. Energy of Minas Gerais Co - ADR’s price-to-book ratio is lower than its industry median ratio of 1.43. This could make Energy of Minas Gerais Co - ADR more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Energy of Minas Gerais Co - ADR’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Energy of Minas Gerais Co - ADR’s price-to-free-cash-flow ratio is lower than its industry median ratio of 14.42. This could make Energy of Minas Gerais Co - ADR more attractive because the lower P/FCF ratio indicates that Energy of Minas Gerais Co - ADR is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Connecticut Light and Power Co’s Value Grade

Value Grade:

The Connecticut Light and Power Company is a United States-based regulated electric utility company. The Company serves residential, commercial and industrial customers in parts of Connecticut. The Company also serves New England customers through Eversource Energy's electric transmission business. The Company's distribution business consists primarily of the purchase, delivery and sale of electricity to its customers. The Company furnishes retail franchise electric service to approximately 1.27 million customers in over 149 cities and towns in Connecticut, covering an area of approximately 4,400 square miles. The Company does not own any electric generation facilities. It owns and maintains transmission facilities that are part of an interstate power transmission grid over which electricity is transmitted across New England. The Company is a wholly owned subsidiary of Eversource Energy, which is a public utility holding company.

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.

Connecticut Light and Power Co has a Value Score of 100, which is considered to be undervalued.

Connecticut Light and Power Co’s price-earnings ratio is 0.6 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 Connecticut Light and Power Co more attractive for value investors.

Connecticut Light and Power Co’s price-to-book ratio is higher than its peers. This could make Connecticut Light and Power Co less attractive for value investors when compared to the industry median at 1.43.

You can read more about Connecticut Light and Power Co’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.

EuroSite Power Inc’s Value Grade

Value Grade:

EuroSite Power Inc. is engaged in providing institutional, commercial and small industrial facilities with clean, reliable power, cooling, heat and hot water by conventional energy suppliers through On-Site Utility energy solutions. Its Green CHP technology is fueled by bio-methane, which uses reciprocating gas engine technology to a conventional CHP to provide zero carbon solution. Its solar photovoltaic (PV) solutions are combined with batteries, or when used on-site with electric vehicle charging points. It is investing in both grid-scale and on-site renewable energy generation assets, including wind and solar farms, as well as battery storage to provide zero, sustainable power. Its onshore wind provides electricity generated by wind turbines located on land driven by the natural movement of the air. Its battery solutions are offered as either in-front of the meter (FTM) or behind-the meter (BTM). Its projects include Coventry Building Society Arena, The Club Company and others.

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.

EuroSite Power Inc has a Value Score of 93, which is considered to be undervalued.

EuroSite Power Inc’s price-earnings ratio is 11.8 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 EuroSite Power Inc more attractive for value investors.

EuroSite Power Inc’s price-to-book ratio is higher than its peers. This could make EuroSite Power Inc less attractive for value investors when compared to the industry median at 1.43.

You can read more about EuroSite Power 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.

Nuvve Holding Corp’s Value Grade

Value Grade:

Nuvve Holding Corp. is a green energy technology company. The Company provides commercial vehicle-to-grid (V2G) technology platform that enables electric vehicle (EV) batteries to store and resell unused energy back to the local electric grid and provide other grid services. The Company?s V2G technology enables to link multiple EV batteries into a virtual power plant to provide bi-directional services to the electrical grid. The Company offers its customers networked charging stations, infrastructure, software, professional services, support, monitoring and parts and labor warranties required to run electric vehicle fleets. The Company?s customers and partners include owner/operators of light duty fleets, heavy duty fleets (including school buses), automotive manufacturers, charge point operators, and strategic partners. The Company also operates a small number of charging stations serving as demonstration projects funded by government grants.

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.

Nuvve Holding Corp has a Value Score of 78, which is considered to be undervalued.

Nuvve Holding Corp’s price-to-book ratio is higher than its peers. This could make Nuvve Holding Corp less attractive for value investors when compared to the industry median at 1.43.

You can read more about Nuvve Holding 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.

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 62, which is considered to be undervalued.

Pinnacle West Capital Corporation’s price-earnings ratio is 17.6 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 1.43.

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.

Union Electric Co’s Value Grade

Value Grade:

Union Electric Company is a holding company. The Company operates a rate-regulated electric generation, transmission, and distribution business and a rate-regulated natural gas distribution business in Missouri. Its segments include Ameren Missouri, Ameren Illinois Electric Distribution, Ameren Illinois Natural Gas and Ameren Transmission. The Ameren Missouri segment includes all of the operations of Ameren Missouri. Ameren Illinois Electric Distribution consists of the electric distribution business of Ameren Illinois. Ameren Illinois Natural Gas consists of the natural gas business of Ameren Illinois. Ameren Transmission primarily consists of the aggregated electric transmission businesses of Ameren Illinois and Ameren Transmission Company of Illinois (ATXI). Ameren Missouri and Ameren Illinois each develop and manage a portfolio of natural gas supply resources. These resources include firm natural gas supply agreements with firm interstate and intrastate transportation capacity.

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.

Union Electric Co has a Value Score of 79, which is considered to be undervalued.

Union Electric Co’s price-earnings ratio is 11.2 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 Union Electric Co more attractive for value investors.

Union Electric Co’s price-to-book ratio is higher than its peers. This could make Union Electric Co less attractive for value investors when compared to the industry median at 1.43.

You can read more about Union Electric Co’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 6 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.

• Energy of Minas Gerais Co - ADR stock has a Value Grade of A.
• Connecticut Light and Power Co stock has a Value Grade of A.
• EuroSite Power Inc stock has a Value Grade of A.
• Nuvve Holding Corp stock has a Value Grade of B.
• Pinnacle West Capital Corporation stock has a Value Grade of B.
• Union Electric Co stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 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.

• 6 Undervalued Utilities - Electric Stocks for Wednesday, February 07
• 3 Undervalued Utilities - Electric Stocks for Tuesday, February 06
• What You Need to Know About PNM Resources Inc's Q4 Earnings
• Why Altus Power Inc’s (AMPS) Stock Is Up 7.16%

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