Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 5 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.

Click the button below to learn more about A+ Investor and subscribe today.

5 Undervalued Utilities - Electric Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 5 undervalued stocks in the Utilities - Electric industry for Thursday, May 23, 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 a sustainable energy company in the United States. The Company operates in approximately 24 states with two primary lines of business: Avangrid Networks and Avangrid Renewables. Avangrid Networks owns eight electric and natural gas utilities, serving approximately 3.3 million customers in New York and New England. Avangrid Renewables owns and operates 9.3 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. Networks segment includes all 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. Its 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 70, which is considered to be undervalued.

When you look at Avangrid Inc’s price-to-sales ratio at 1.68 compared to the industry median at 2.01, 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 15.59 compared to the industry median at 17.43. This means it has a lower share price relative to earnings compared to its peers. This could make Avangrid Inc more attractive for value investors.

Now, let’s assess Avangrid Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 12.4, when compared to the industry median of 11.9, 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 2.61%. 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 1.58. This could make Avangrid Inc more attractive to investors looking for a new addition to their portfolio.

Entergy Corp’s Value Grade

Value Grade:

Entergy Corporation is an integrated energy company engaged primarily in electric power production and retail distribution operations. The Company operates primarily through a single segment, Utility. The Utility segment includes the generation, transmission, distribution, and sale of electric power in portions of Arkansas, Mississippi, Texas, and Louisiana, including the City of New Orleans; and operation of a small natural gas distribution business in portions of Louisiana. The Utility segment includes five retail electric utility subsidiaries: Entergy Arkansas, Entergy Louisiana, Entergy Mississippi, Entergy New Orleans, and Entergy Texas. These companies generate, transmit, distribute, and sell electric power to retail and wholesale customers in Arkansas, Louisiana, Mississippi, and Texas. The Company owns and operates power plants with approximately 24,000 MW of electric generating capacity. It delivers electricity to approximately three million utility 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.

Entergy Corp has a Value Score of 68, which is considered to be undervalued.

Entergy Corp’s price-earnings ratio is 11.3 compared to the industry median at 17.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Entergy Corp more attractive for value investors.

Entergy Corp’s price-to-book ratio is lower than its peers. This could make Entergy Corp more attractive for value investors when compared to the industry median at 1.58.

You can read more about Entergy 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.

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 97, which is considered to be undervalued.

EuroSite Power Inc’s price-earnings ratio is 9.0 compared to the industry median at 17.4. 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 1.58.

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.

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 82, which is considered to be undervalued.

Korea Electric Power Corp (ADR)’s price-earnings ratio is 18.9 compared to the industry median at 17.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Korea Electric Power Corp (ADR) less attractive for value investors.

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 1.58.

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.

Oklo Inc’s Value Grade

Value Grade:

Oklo Inc. is a fission technology and nuclear fuel recycling company. The Company is engaged in developing fast fission power plants to provide clean and affordable energy at scale. It is developing advanced fuel recycling technologies in collaboration with the United States Department of Energy and United States National Laboratories. The Company provides 24/7 clean energy to data centers, factories, industrial sites, communities, and defense facilities. It offers heat and power through power purchase agreements. Its reactors can convert used nuclear fuel into clean energy. It produces scalable power plants ranging from 15 megawatts (MW) to 50 (MW) of electric power. It is focused on supplying clean and affordable energy to customers across the artificial intelligence, data center, energy, defense, and industrial markets, among 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.

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

Oklo Inc’s price-earnings ratio is 37.9 compared to the industry median at 17.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Oklo Inc less attractive for value investors.

Oklo Inc’s price-to-book ratio is higher than its peers. This could make Oklo Inc less attractive for value investors when compared to the industry median at 1.58.

You can read more about Oklo 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 5 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.
• Entergy Corp stock has a Value Grade of B.
• EuroSite Power Inc stock has a Value Grade of A.
• Korea Electric Power Corp (ADR) stock has a Value Grade of A.
• Oklo Inc stock has a Value Grade of B.

Now that you have a bit more background about each of the 5 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.

• 5 Undervalued Utilities - Electric Stocks for Thursday, May 23
• 4 Undervalued Utilities - Electric Stocks for Wednesday, May 22
• Why Brazilian Electric Power Co - ADR’s (EBR) Stock Is Down 4.08%
• Why Empresa Distribuidora y Cmrz Nrt SA(ADR)’s (EDN) Stock Is Down 7.07%

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.