OVV vs. CNQ: Which Stock Should Value Investors Buy Now?
Investors interested in Oil and Gas - Exploration and Production - Canadian stocks are likely familiar with Ovintiv (OVV) and Canadian Natural Resources (CNQ). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Ovintiv and Canadian Natural Resources are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that OVV likely has seen a stronger improvement to its earnings outlook than CNQ has recently. However, value investors will care about much more than just this.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.
OVV currently has a forward P/E ratio of 7.45, while CNQ has a forward P/E of 11.74. We also note that OVV has a PEG ratio of 0.50. 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. CNQ currently has a PEG ratio of 10.97.
Another notable valuation metric for OVV is its P/B ratio of 1.42. 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, CNQ has a P/B of 2.47.
Based on these metrics and many more, OVV holds a Value grade of A, while CNQ has a Value grade of C.
OVV 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 OVV is likely the superior value option right now.
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Ovintiv Inc. (OVV) : Free Stock Analysis Report
Canadian Natural Resources Limited (CNQ) : Free Stock Analysis Report
