LBRT vs. AROC: Which Stock Should Value Investors Buy Now?
Investors with an interest in Oil and Gas - Field Services stocks have likely encountered both 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, Liberty Oilfield Services has a Zacks Rank of #2 (Buy), while Archrock Inc. has a Zacks Rank of #3 (Hold). This means that LBRT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.
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 6.26, while AROC has a forward P/E of 20.28. We also note that LBRT has a PEG ratio of 0.83. 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 2.90.
Another notable valuation metric for LBRT is its P/B ratio of 1.99. 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, AROC has a P/B of 2.37.
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
