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Investors looking for stocks in the Utility - Electric Power sector might want to consider either Portland General Electric (POR) or American Electric Power (AEP). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Portland General Electric and American Electric Power are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that POR likely has seen a stronger improvement to its earnings outlook than AEP has recently. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

POR currently has a forward P/E ratio of 13.73, while AEP has a forward P/E of 15.30. We also note that POR has a PEG ratio of 2.67. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. AEP currently has a PEG ratio of 3.

Another notable valuation metric for POR is its P/B ratio of 1.27. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, AEP has a P/B of 1.76.

Based on these metrics and many more, POR holds a Value grade of B, while AEP has a Value grade of C.

POR sticks out from AEP in both our Zacks Rank and Style Scores models, so value investors will likely feel that POR is the better option right now.

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