3 Undervalued Electric Utilities Stocks for Thursday, March 20

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.

What Goes Into AAII’s Value Grade?

3 Undervalued Electric Utilities Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Electric Utilities industry for Thursday, March 20, 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).

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 96, which is considered to be undervalued.

When you look at Centrais Elétricas Brasileiras S.A. – Eletrobrás’s price-to-sales ratio at 0.46 compared to the industry median at 2.09, this company has a lower price relative to revenue compared to its peers. This could make Centrais Elétricas Brasileiras S.A. – Eletrobrás’s stock more attractive for value investors.

Centrais Elétricas Brasileiras S.A. – Eletrobrás’s price-earnings ratio is 9.70 compared to the industry median at 20.40. This means it has a lower share price relative to earnings compared to its peers. This could make Centrais Elétricas Brasileiras S.A. – Eletrobrás more attractive for value investors.

Now, let’s assess Centrais Elétricas Brasileiras S.A. – Eletrobrás’s EV/EBITDA ratio, also known as enterprise multiple. At 14.2, when compared to the industry median of 11.4, 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. Centrais Elétricas Brasileiras S.A. – Eletrobrás’s shareholder yield is higher than its industry median ratio of 2.75%. 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. Centrais Elétricas Brasileiras S.A. – Eletrobrás’s price-to-book ratio is lower than its industry median ratio of 1.66. This could make Centrais Elétricas Brasileiras S.A. – Eletrobrás more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Centrais Elétricas Brasileiras S.A. – Eletrobrás’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Centrais Elétricas Brasileiras S.A. – Eletrobrás’s price-to-free-cash-flow ratio is lower than its industry median ratio of 8.50. This could make Centrais Elétricas Brasileiras S.A. – Eletrobrás more attractive because the lower P/FCF ratio indicates that Centrais Elétricas Brasileiras S.A. – Eletrobrás 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.

Hawaiian Electric Industries, Inc.’s Value Grade

Value Grade:

Hawaiian Electric Industries, Inc., together with its subsidiaries, engages in the electric utility business in the United States. It operates through Electric Utility and Other segments. The Electric Utility segment engages in the production, purchase, transmission, distribution, and sale of electricity in the islands of Oahu; Hawaii; and Maui, Lanai, and Molokai. This segment’s renewable energy sources and potential sources include wind, solar, photovoltaic, geothermal, wave, hydroelectric, municipal waste, and other biofuels. This segment serves suburban communities, resorts, the United States Armed Forces installations, and agricultural operations. The Other segment invests in non-regulated renewable energy and sustainable infrastructure in the State of Hawaii. Hawaiian Electric Industries, Inc. was founded in 1891 and is headquartered in Honolulu, Hawaii.

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.

Hawaiian Electric Industries, Inc. has a Value Score of 69, which is considered to be undervalued.

Hawaiian Electric Industries, Inc.’s price-to-book ratio is higher than its peers. This could make Hawaiian Electric Industries, Inc. less attractive for value investors when compared to the industry median at 1.66.

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 92, which is considered to be undervalued.

Pampa Energía S.A.’s price-earnings ratio is 198.4 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 1.66.

Choosing Which of the 3 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.

• Centrais Elétricas Brasileiras S.A. – Eletrobrás stock has a Value Grade of A.
• Hawaiian Electric Industries, Inc. stock has a Value Grade of B.
• Pampa Energía S.A. stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 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.

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.

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