Investors interested in stocks from the Oil and Gas - Integrated - United States sector have probably already heard of Equitrans Midstream Corporation (ETRN) and Occidental Petroleum (OXY). 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 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.
Equitrans Midstream Corporation has a Zacks Rank of #1 (Strong Buy), while Occidental Petroleum has a Zacks Rank of #3 (Hold) right now. This means that ETRN's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
ETRN currently has a forward P/E ratio of 10.88, while OXY has a forward P/E of 13.36. We also note that ETRN has a PEG ratio of 1.55. 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. OXY currently has a PEG ratio of 2.67.
Another notable valuation metric for ETRN is its P/B ratio of 1.09. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, OXY has a P/B of 1.78.
Based on these metrics and many more, ETRN holds a Value grade of B, while OXY has a Value grade of C.
ETRN has seen stronger estimate revision activity and sports more attractive valuation metrics than OXY, so it seems like value investors will conclude that ETRN is the superior option right now.
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Equitrans Midstream Corporation (ETRN) : Free Stock Analysis Report
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