OXY vs. WHD: Which Stock Is the Better Value Option?
Investors interested in stocks from the Oil and Gas - Integrated - United States sector have probably already heard of Occidental Petroleum (OXY) and Cactus, Inc. (WHD). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Currently, Occidental Petroleum has a Zacks Rank of #2 (Buy), while Cactus, Inc. has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that OXY likely has seen a stronger improvement to its earnings outlook than WHD has recently. But this is only part of the picture for value investors.
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 Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
OXY currently has a forward P/E ratio of 6.01, while WHD has a forward P/E of 24.92. We also note that OXY has a PEG ratio of 0.39. 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. WHD currently has a PEG ratio of 0.68.
Another notable valuation metric for OXY is its P/B ratio of 3.41. 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, WHD has a P/B of 4.95.
Based on these metrics and many more, OXY holds a Value grade of A, while WHD has a Value grade of D.
OXY has seen stronger estimate revision activity and sports more attractive valuation metrics than WHD, so it seems like value investors will conclude that OXY is the superior option right now.
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Occidental Petroleum Corporation (OXY) : Free Stock Analysis Report
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