Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with PDC Energy (PDCE) and Concho Resources (CXO). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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, PDC Energy has a Zacks Rank of #2 (Buy), while Concho Resources has a Zacks Rank of #3 (Hold). This means that PDCE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one piece of the puzzle 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.
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.
PDCE currently has a forward P/E ratio of 14, while CXO has a forward P/E of 25.96. We also note that PDCE has a PEG ratio of 0.36. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. CXO currently has a PEG ratio of 0.91.
Another notable valuation metric for PDCE is its P/B ratio of 1.07. 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, CXO has a P/B of 1.19.
These are just a few of the metrics contributing to PDCE's Value grade of A and CXO's Value grade of C.
PDCE sticks out from CXO in both our Zacks Rank and Style Scores models, so value investors will likely feel that PDCE is the better option right now.
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PDC Energy, Inc. (PDCE) : Free Stock Analysis Report
Concho Resources Inc. (CXO) : Free Stock Analysis Report
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