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 Friday, February 09, 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.

Avangrid Inc’s Value Grade

Value Grade:

Avangrid, Inc. is an energy services holding company. The Company operates in approximately 24 states with two primary lines of business: Avangrid Networks and Avangrid Renewables. Avangrid Networks owns approximately eight electric and natural gas utilities, serving customers in New York and New England. Avangrid Renewables owns and operates approximately 9.2 gigawatts of electricity capacity, primarily through wind and solar power, with a presence in 22 states across the United States. The Company operates through two segments: Networks and Renewables. The Networks segment includes the energy transmission and distribution activities, any other regulated activity originating in New York and Maine and regulated electric distribution, electric transmission and gas distribution activities originating in Connecticut and Massachusetts. The Renewables segment offers activities relating to renewable energy, mainly wind energy generation, and trading related to such activities.

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.

Avangrid Inc has a Value Score of 66, which is considered to be undervalued.

When you look at Avangrid Inc’s price-to-sales ratio at 1.42 compared to the industry median at 1.62, this company has a lower price relative to revenue compared to its peers. This could make Avangrid Inc’s stock more attractive for value investors.

Avangrid Inc’s price-earnings ratio is 21.68 compared to the industry median at 16.33. This means it has a higher share price relative to earnings compared to its peers. This could make Avangrid Inc less attractive for value investors.

Now, let’s assess Avangrid Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 12.7, when compared to the industry median of 11.6, the company may be considered overvalued 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. Avangrid Inc’s shareholder yield is higher than its industry median ratio of 3.26%. 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. Avangrid Inc’s price-to-book ratio is lower than its industry median ratio of 1.42. This could make Avangrid Inc more attractive to investors looking for a new addition to their portfolio.

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 92, which is considered to be undervalued.

Energy of Minas Gerais Co - ADR’s price-earnings ratio is 4.6 compared to the industry median at 16.3. This means that it has a lower price relative to its earnings compared to its peers. This makes Energy of Minas Gerais Co - ADR more attractive for value investors.

Energy of Minas Gerais Co - ADR’s price-to-book ratio is higher than its peers. This could make Energy of Minas Gerais Co - ADR less attractive for value investors when compared to the industry median at 1.42.

You can read more about Energy of Minas Gerais Co - 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.

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 16.3. 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 1.42.

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.

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 62, which is considered to be undervalued.

Evergy Inc’s price-earnings ratio is 16.5 compared to the industry median at 16.3. 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 1.42.

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.

NRG Energy Inc’s Value Grade

Value Grade:

NRG Energy, Inc. is an energy, smart home and services company, which is engaged in producing and selling energy and related products and services in the United States and Canada. It develops sustainable solutions under the brand names NRG, Reliant, Direct Energy, Green Mountain Energy, and Vivint. Its segments include Texas, which includes activities related to customer, plant and market operations in Texas; East, which includes activities related to customer, plant and market operations in the East; West/Services/Other, which includes assets and activities, namely activities related to customer, plant and market operations in the West and Canada, the Services businesses, activity related to the Cottonwood facility, the remaining renewables activity, including its equity method investment in Ivanpah Master Holdings, LLC, and activity related to its equity method investment for the Gladstone power plant, and Vivint smart home. It serves residential, commercial and industrial customers.

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.

NRG Energy Inc has a Value Score of 69, which is considered to be undervalued.

NRG Energy Inc’s price-to-book ratio is lower than its peers. This could make NRG Energy Inc more attractive for value investors when compared to the industry median at 1.42.

You can read more about NRG Energy 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 79, 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 1.42.

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 63, which is considered to be undervalued.

Pinnacle West Capital Corporation’s price-earnings ratio is 17.1 compared to the industry median at 16.3. 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 1.42.

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.

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.

• Avangrid Inc stock has a Value Grade of B.
• Energy of Minas Gerais Co - ADR stock has a Value Grade of A.
• EuroSite Power Inc stock has a Value Grade of A.
• Evergy Inc stock has a Value Grade of B.
• NRG Energy Inc stock has a Value Grade of B.
• Nuvve Holding Corp stock has a Value Grade of B.
• Pinnacle West Capital Corporation stock has a Value Grade of B.

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 Friday, February 09
• 4 Undervalued Utilities - Electric Stocks for Thursday, February 08
• What You Need to Know About DTE Energy Co's Q4 Earnings
• What You Need to Know About FirstEnergy Corp's Q3 Earnings

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