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MARKETS LIVE BLOG:

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Owner of Facebook and Instagram plans to spend up to US$10B on AI infrastructure investments

KEP vs. OGE: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 min read

Investors looking for stocks in the Utility - Electric Power sector might want to consider either Korea Electric Power (KEP) 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, both Korea Electric Power and OGE Energy are holding a Zacks Rank of # 2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

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.

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The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

KEP currently has a forward P/E ratio of 7.53, while OGE has a forward P/E of 15.81. We also note that KEP has a PEG ratio of 1.51. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. OGE currently has a PEG ratio of 3.58.

Another notable valuation metric for KEP is its P/B ratio of 0.22. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, OGE has a P/B of 1.87.

Based on these metrics and many more, KEP holds a Value grade of A, while OGE has a Value grade of D.

Both KEP and OGE are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that KEP is the superior value option right now.


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Korea Electric Power Corporation (KEP) : Free Stock Analysis Report
 
OGE Energy Corporation (OGE) : Free Stock Analysis Report
 
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