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.

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 21, 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.

Enel Chile SA - ADR’s Value Grade

Value Grade:

Enel Chile SA, formerly Enersis Chile SA, is a Chile-based electricity utility company. The Company, through its combined entities and affiliates, is engaged in the generation, transmission and distribution of electricity businesses. The Company's segments include Generation, Distribution, and Other businesses and intercompany transaction adjustments. Additionally in its segments, the Company has Enel X Chile, a project engaged in seeking to open energy to new uses, technologies, associations and services. The businesses that are grouped into 4 areas are considered: e-City, e-Home, e-Industries and e-Mobility. It owns and operates electricity generation and distribution units in Chile through its subsidiaries.

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.

Enel Chile SA - ADR has a Value Score of 93, which is considered to be undervalued.

When you look at Enel Chile SA - ADR’s price-to-sales ratio at 0.83 compared to the industry median at 1.69, this company has a lower price relative to revenue compared to its peers. This could make Enel Chile SA - ADR’s stock more attractive for value investors.

Enel Chile SA - ADR’s price-earnings ratio is 2.93 compared to the industry median at 16.02. This means it has a lower share price relative to earnings compared to its peers. This could make Enel Chile SA - ADR more attractive for value investors.

Now, let’s assess Enel Chile SA - ADR’s EV/EBITDA ratio, also known as enterprise multiple. At 4.8, 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. Enel Chile SA - ADR’s shareholder yield is lower than its industry median ratio of 2.95%. 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. Enel Chile SA - ADR’s price-to-book ratio is lower than its industry median ratio of 1.45. This could make Enel Chile SA - ADR more attractive to investors looking for a new addition to their portfolio.

Hawaiian Electric Industries, Inc.’s Value Grade

Value Grade:

Hawaiian Electric Industries, Inc. is a holding company with its subsidiaries principally engaged in electric utility, banking, and renewable/sustainable infrastructure businesses operating in the State of Hawaii. The Company?s segments include Electric Utility, Bank and Other. The Electric Utility segment provides essential electric service to Hawaii?s population through the operation of five separate grids that serve communities on the islands of Oahu, Hawaii, Maui, Lanai and Molokai. The Bank segment provides a range of banking and other financial services to Hawaii consumers and businesses. The Bank segment is also engaged in lending activities include origination, purchase and sale of loans, residential mortgage lending, construction and development lending, multifamily residential and commercial real estate lending, consumer lending, commercial lending and loan origination fee and servicing income.

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.

Hawaiian Electric Industries, Inc. has a Value Score of 85, which is considered to be undervalued.

Hawaiian Electric Industries, Inc.’s price-earnings ratio is 7.3 compared to the industry median at 16.0. This means that it has a lower price relative to its earnings compared to its peers. This makes Hawaiian Electric Industries, Inc. more attractive for value investors.

Hawaiian Electric Industries, Inc.’s price-to-book ratio is higher than its peers. This could make Hawaiian Electric Industries, Inc. less attractive for value investors when compared to the industry median at 1.45.

You can read more about Hawaiian Electric Industries, 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 70, 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 1.45.

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.

Pineapple Energy Inc’s Value Grade

Value Grade:

Pineapple Energy Inc. is a domestic operator and consolidator of residential and commercial solar, battery storage, and grid services solutions. The Company is focused on finding, acquiring, integrating, and growing local and regional solar, storage, and energy services companies nationwide. It is primarily engaged in the sale, design, and installation of photovoltaic solar energy systems and battery storage systems through its Hawaii-based Hawaii Energy Connection (HEC) and New York-based SUNation Solar Systems (SUNation) entities. Its primary customers are residential homeowners. The Company also provides solar energy systems to commercial owners and other municipal customers. Through its E-Gear, LLC (E-Gear) business, it also develops, manufactures, and sells patented edge-of-grid energy management software and hardware technology, such as energy management control devices. Its primary customers for this technology are energy services companies and other utilities.

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.

Pineapple Energy Inc has a Value Score of 83, which is considered to be undervalued.

Pineapple Energy Inc’s price-to-book ratio is higher than its peers. This could make Pineapple Energy Inc less attractive for value investors when compared to the industry median at 1.45.

You can read more about Pineapple 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.

Spruce Power Holding Corp’s Value Grade

Value Grade:

Spruce Power Holding Corporation is an owner and operator of distributed solar energy assets across the United States. The Company provides subscription-based services that make it easy for homeowners to own and maintain rooftop solar and battery storage. The Company also engages in the energy efficiency and solar loan servicing business. The Company offers services that include asset management services and operating and maintenance services for residential solar photovoltaic projects, in addition to, loan servicing support that allows residential consumers to finance energy-efficient home improvements and residential solar energy systems. The Company also provides management services to approximately 7,500 systems owned by other companies. These services include billing and collections, account management services, financial reporting, homeowner support and maintenance monitoring and dispatch.

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.

Spruce Power Holding Corp has a Value Score of 65, which is considered to be undervalued.

Spruce Power Holding Corp’s price-to-book ratio is higher than its peers. This could make Spruce Power Holding Corp less attractive for value investors when compared to the industry median at 1.45.

You can read more about Spruce Power 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.

Via Renewables Inc’s Value Grade

Value Grade:

Via Renewables, Inc. is an independent retail energy services company. The Company provides residential and commercial customers in the United States with an alternative choice for natural gas and electricity. The Company operates through two segments: Retail Electricity and Retail Natural Gas. In the Retail Electricity segment, the Company purchases electricity supply through physical and financial transactions with market counterparties and independent system operators (ISOs) and supplies electricity to residential and commercial consumers pursuant to fixed-price and variable-price contracts. In the Retail Natural Gas segment, the Company purchases natural gas supply through physical and financial transactions with market counterparties and supplies natural gas to residential and commercial consumers pursuant to fixed-price and variable-price contracts. The Company operates in approximately 103 utility service territories across 20 states and the District of Columbia.

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.

Via Renewables Inc has a Value Score of 94, which is considered to be undervalued.

Via Renewables Inc’s price-to-book ratio is higher than its peers. This could make Via Renewables Inc less attractive for value investors when compared to the industry median at 1.45.

You can read more about Via Renewables 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.

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.

• Enel Chile SA - ADR stock has a Value Grade of A.
• Hawaiian Electric Industries, Inc. stock has a Value Grade of A.
• NRG Energy Inc stock has a Value Grade of B.
• Pineapple Energy Inc stock has a Value Grade of A.
• Spruce Power Holding Corp stock has a Value Grade of B.
• Via Renewables Inc stock has a Value Grade of A.

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 21
• 3 Undervalued Utilities - Electric Stocks for Tuesday, February 20
• Why Brazilian Electric Power Co - ADR’s (EBR) Stock Is Up 5.48%
• Why Korea Electric Power Corp (ADR)’s (KEP) Stock Is Up 11.03%

AAII Disclaimer

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