AR or SM: Which Is the Better Value Stock Right Now?
Investors with an interest in Oil and Gas - Exploration and Production - United States stocks have likely encountered both Antero Resources (AR) and SM Energy (SM). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Antero Resources has a Zacks Rank of #1 (Strong Buy), while SM Energy has a Zacks Rank of #5 (Strong Sell). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that AR has an improving earnings outlook. 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.
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.
AR currently has a forward P/E ratio of 65.08, while SM has a forward P/E of 105.39. We also note that AR has a PEG ratio of 3.25. 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. SM currently has a PEG ratio of 4.84.
Another notable valuation metric for AR is its P/B ratio of 0.29. 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, SM has a P/B of 0.58.
Based on these metrics and many more, AR holds a Value grade of A, while SM has a Value grade of D.
AR 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 AR is likely the superior value option right now.
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Antero Resources Corporation (AR) : Free Stock Analysis Report
SM Energy Company (SM) : Free Stock Analysis Report
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