MRO vs. ETRN: Which Stock Should Value Investors Buy Now?
Investors with an interest in Oil and Gas - Integrated - United States stocks have likely encountered both Marathon Oil (MRO) and Equitrans Midstream (ETRN). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, Marathon Oil is sporting a Zacks Rank of #2 (Buy), while Equitrans Midstream has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that MRO likely has seen a stronger improvement to its earnings outlook than ETRN has recently. 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.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
MRO currently has a forward P/E ratio of 10.65, while ETRN has a forward P/E of 20.78. We also note that MRO has a PEG ratio of 0.54. 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. ETRN currently has a PEG ratio of 1.17.
Another notable valuation metric for MRO is its P/B ratio of 1.51. 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, ETRN has a P/B of 2.92.
These are just a few of the metrics contributing to MRO's Value grade of A and ETRN's Value grade of C.
MRO 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 MRO is likely the superior value option right now.
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Marathon Oil Corporation (MRO) : Free Stock Analysis Report
Equitrans Midstream Corporation (ETRN) : Free Stock Analysis Report
