Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 stocks made the list for top value stocks in the Electric Utilities 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 Electric Utilities 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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4 Undervalued Electric Utilities Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 4 undervalued stocks in the Electric Utilities industry for Friday, February 14, 2025. Let’s take a closer look at their individual scores to see how they measure up against each other and the Electric Utilities 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.

Duke Energy Corporation’s Value Grade

Value Grade:

Duke Energy Corporation, together with its subsidiaries, operates as an energy company in the United States. It operates through two segments: Electric Utilities and Infrastructure (EU&I;), and Gas Utilities and Infrastructure (GU&I;). The EU&I; segment generates, transmits, distributes, and sells electricity in the Carolinas, Florida, and the Midwest. It generates electricity through coal, hydroelectric, natural gas, oil, solar and wind sources, renewables, and nuclear fuel. This segment also engages in the wholesale of electricity to municipalities, electric cooperative utilities, and load-serving entities. The GU&I; segment distributes natural gas to residential, commercial, industrial, and power generation natural gas customers; and invests in pipeline transmission projects, renewable natural gas projects, and natural gas storage facilities. The company was formerly known as Duke Energy Holding Corp. and changed its name to Duke Energy Corporation in April 2006. Duke Energy Corporation was founded in 1904 and is headquartered in Charlotte, North Carolina.

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.

Duke Energy Corporation has a Value Score of 61, which is considered to be undervalued.

When you look at Duke Energy Corporation’s price-to-sales ratio at 2.90 compared to the industry median at 2.02, this company has a higher price relative to revenue compared to its peers. This could make Duke Energy Corporation’s stock less attractive for value investors.

Duke Energy Corporation’s price-earnings ratio is 20.00 compared to the industry median at 20.35. This means it has a lower share price relative to earnings compared to its peers. This could make Duke Energy Corporation more attractive for value investors.

Now, let’s assess Duke Energy Corporation’s EV/EBITDA ratio, also known as enterprise multiple. At 11.7, when compared to the industry median of 11.5, 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. Duke Energy Corporation’s shareholder yield is higher than its industry median ratio of 2.80%. 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. Duke Energy Corporation’s price-to-book ratio is higher than its industry median ratio of 1.72. This could make Duke Energy Corporation fairly attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Duke Energy Corporation’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Duke Energy Corporation’s price-to-free-cash-flow ratio is lower than its industry median ratio of 7.60. This could make Duke Energy Corporation more attractive because the lower P/FCF ratio indicates that Duke Energy Corporation 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.

Centrais Elétricas Brasileiras S.A. - Eletrobrás’s Value Grade

Value Grade:

Centrais Elétricas Brasileiras S.A. - Eletrobrás, through its subsidiaries, engages in the generation, transmission, and commercialization of electricity in Brazil. The company generates electricity through hydroelectric, thermoelectric, nuclear, wind, and solar plants. As of December 31, 2023, it owned and operated 44 hydroelectric plants with a total capacity of 42,293.5 megawatt (MW); 5 thermal plants, including coal and gas power generation units with a total installed capacity of 1,632 MW; and two nuclear power plants comprising Angra 1 with an installed capacity of 657 MW and Angra 2 with an installed capacity of 1350 MW. It also owns and operates 66,539.17 kilometers of transmission lines. The company was incorporated in 1962 and is based in Rio De Janeiro, Brazil.

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.

Centrais Elétricas Brasileiras S.A. - Eletrobrás has a Value Score of 98, which is considered to be undervalued.

Centrais Elétricas Brasileiras S.A. - Eletrobrás’s price-earnings ratio is 7.6 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Centrais Elétricas Brasileiras S.A. - Eletrobrás more attractive for value investors.

Centrais Elétricas Brasileiras S.A. - Eletrobrás’s price-to-book ratio is higher than its peers. This could make Centrais Elétricas Brasileiras S.A. - Eletrobrás less attractive for value investors when compared to the industry median at 1.72.

You can read more about Centrais Elétricas Brasileiras S.A. - Eletrobrás’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.

Edison International’s Value Grade

Value Grade:

Edison International, through its subsidiaries, engages in the generation and distribution of electric power. The company supplies and delivers electricity to approximately 50,000 square mile area of southern California to residential, commercial, industrial, public authorities, agricultural, and other sectors. Its transmission facilities consist of lines ranging from 55 kV to 500 kV and approximately 80 transmission substations; distribution system consists of approximately 38,000 circuit-miles of overhead lines; approximately 31,000 circuit-miles of underground lines; and 730 distribution substations. The company was founded in 1886 and is based in Rosemead, California.

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.

Edison International has a Value Score of 81, which is considered to be undervalued.

Edison International’s price-earnings ratio is 15.1 compared to the industry median at 20.4. This means that it has a lower price relative to its earnings compared to its peers. This makes Edison International more attractive for value investors.

Edison International’s price-to-book ratio is higher than its peers. This could make Edison International less attractive for value investors when compared to the industry median at 1.72.

You can read more about Edison International’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.

Pampa Energía S.A.’s Value Grade

Value Grade:

Pampa Energía S.A. operates as an integrated power company in Argentina. The company operates through Electricity Generation, Oil and Gas, Petrochemicals, and Holding and Other Business segments. It generates electricity through thermal plants, hydroelectric plants, and wind farms with a 5,332 megawatt (MW) installed capacity. The company also explores for and produces oil and gas in the provinces of Neuquén and Río Negro. In addition, it produces petrochemicals, such as styrene, synthetic rubber, and polystyrene. Further, the company operates and maintains a 22,391 km high-voltage electricity transmission network in Argentina. Additionally, it holds a concession for the transportation of natural gas with 9,248 km of gas pipelines in the center, west, and south of Argentina; and processes and sells natural gas liquids in Bahía Blanca in the Province of Buenos Aires, as well as offers related advisory services. The company was formerly known as Pampa Holding S.A. and changed its name to Pampa Energía S.A. in September 2008. Pampa Energía S.A. was incorporated in 1945 and is based in Buenos Aires, Argentina.

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.

Pampa Energía S.A. has a Value Score of 94, which is considered to be undervalued.

Pampa Energía S.A.’s price-earnings ratio is 170.0 compared to the industry median at 20.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Pampa Energía S.A. less attractive for value investors.

Pampa Energía S.A.’s price-to-book ratio is higher than its peers. This could make Pampa Energía S.A. less attractive for value investors when compared to the industry median at 1.72.

You can read more about Pampa Energía S.A.’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 Electric Utilities 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 Electric Utilities stocks as well as other industrys.

Choosing Which of the 4 Best Electric Utilities 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.

• Duke Energy Corporation stock has a Value Grade of B.
• Centrais Elétricas Brasileiras S.A. - Eletrobrás stock has a Value Grade of A.
• Edison International stock has a Value Grade of A.
• Pampa Energía S.A. stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 undervalued stocks in the Electric Utilities 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 Electric Utilities Stocks

Want to learn more about Electric Utilities 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.

• 4 Undervalued Electric Utilities Stocks for Friday, February 14
• 3 Undervalued Electric Utilities Stocks for Wednesday, February 12
• What You Need to Know About Exelon Corporation's Q1 Earnings
• 3 Undervalued Electric Utilities Stocks for Tuesday, February 11

AAII Disclaimer

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