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Investors interested in Oil and Gas - Integrated - United States stocks are likely familiar with Marathon Oil (MRO) and ConocoPhillips (COP). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Both Marathon Oil and ConocoPhillips have a Zacks Rank of # 1 (Strong Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
MRO currently has a forward P/E ratio of 12.74, while COP has a forward P/E of 13.31. We also note that MRO has a PEG ratio of 0.33. 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. COP currently has a PEG ratio of 1.90.
Another notable valuation metric for MRO is its P/B ratio of 0.84. 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, COP has a P/B of 1.70.
Based on these metrics and many more, MRO holds a Value grade of B, while COP has a Value grade of D.
Both MRO and COP are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that MRO is the superior value option right now.
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Marathon Oil Corporation (MRO) : Free Stock Analysis Report
ConocoPhillips (COP) : Free Stock Analysis Report
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