LBRT vs. AROC: Which Stock Is the Better Value Option?
Investors interested in stocks from the Oil and Gas - Field Services sector have probably already heard of Liberty Oilfield Services (LBRT) and Archrock Inc. (AROC). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Liberty Oilfield Services has a Zacks Rank of #1 (Strong Buy), while Archrock Inc. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that LBRT likely has seen a stronger improvement to its earnings outlook than AROC has recently. However, value investors will care about much more than just this.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks 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.
LBRT currently has a forward P/E ratio of 6.30, while AROC has a forward P/E of 21.53. We also note that LBRT has a PEG ratio of 0.75. 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. AROC currently has a PEG ratio of 3.08.
Another notable valuation metric for LBRT is its P/B ratio of 1.91. 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, AROC has a P/B of 2.52.
Based on these metrics and many more, LBRT holds a Value grade of A, while AROC has a Value grade of C.
LBRT 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 LBRT is likely the superior value option right now.
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Liberty Energy Inc. (LBRT) : Free Stock Analysis Report
Archrock, Inc. (AROC) : Free Stock Analysis Report
