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HAL or CLB: Which Is the Better Value Stock Right Now?

Zacks Equity Research

Investors looking for stocks in the Oil and Gas - Field Services sector might want to consider either Halliburton (HAL) or Core Laboratories (CLB). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Halliburton and Core Laboratories are both sporting a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

HAL currently has a forward P/E ratio of 28.81, while CLB has a forward P/E of 29.81. We also note that HAL has a PEG ratio of 4.41. 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. CLB currently has a PEG ratio of 10.61.

Another notable valuation metric for HAL is its P/B ratio of 2.64. 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, CLB has a P/B of 16.49.

These metrics, and several others, help HAL earn a Value grade of B, while CLB has been given a Value grade of C.

Both HAL and CLB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that HAL is the superior value option right now.


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Zacks Investment Research