RWEOY or OGE: Which Is the Better Value Stock Right Now?

Investors looking for stocks in the Utility - Electric Power sector might want to consider either RWE AG (RWEOY) or OGE Energy (OGE). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

RWE AG has a Zacks Rank of #1 (Strong Buy), while OGE Energy has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that RWEOY likely has seen a stronger improvement to its earnings outlook than OGE has recently. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

RWEOY currently has a forward P/E ratio of 17.23, while OGE has a forward P/E of 18.91. We also note that RWEOY has a PEG ratio of 1.19. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. OGE currently has a PEG ratio of 3.01.

Another notable valuation metric for RWEOY is its P/B ratio of 0.86. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, OGE has a P/B of 1.9.

These metrics, and several others, help RWEOY earn a Value grade of B, while OGE has been given a Value grade of C.

RWEOY is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that RWEOY is likely the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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