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RWEOY vs. ED: Which Stock Is the Better Value Option?

Investors with an interest in Utility - Electric Power stocks have likely encountered both RWE AG (RWEOY) and Consolidated Edison (ED). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

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.

Currently, both RWE AG and Consolidated Edison are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

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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 10.87, while ED has a forward P/E of 18.90. We also note that RWEOY has a PEG ratio of 7.50. 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. ED currently has a PEG ratio of 9.45.

Another notable valuation metric for RWEOY is its P/B ratio of 0.79. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, ED has a P/B of 1.53.

These are just a few of the metrics contributing to RWEOY's Value grade of B and ED's Value grade of C.

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

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RWE AG (RWEOY) : Free Stock Analysis Report

Consolidated Edison Inc (ED) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research