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DVN vs. APC: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
FS Bancorp (FSBW) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with Devon Energy (DVN) and Anadarko Petroleum (APC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Devon Energy and Anadarko Petroleum are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DVN has an improving earnings outlook. 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.

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.

DVN currently has a forward P/E ratio of 19.71, while APC has a forward P/E of 27.77. We also note that DVN has a PEG ratio of 1.48. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. APC currently has a PEG ratio of 2.29.

Another notable valuation metric for DVN is its P/B ratio of 1.58. 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, APC has a P/B of 2.08.

Based on these metrics and many more, DVN holds a Value grade of A, while APC has a Value grade of C.

DVN has seen stronger estimate revision activity and sports more attractive valuation metrics than APC, so it seems like value investors will conclude that DVN is the superior option right now.

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Devon Energy Corporation (DVN) : Free Stock Analysis Report
Anadarko Petroleum Corporation (APC) : Free Stock Analysis Report
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