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PRT vs. MRO: Which Stock Is the Better Value Option?

Zacks Equity Research
J.Jill (JILL) doesn't possess the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

Investors interested in Oil and Gas - Integrated - United States stocks are likely familiar with PermRock Royalty Trust (PRT) and Marathon Oil (MRO). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Currently, PermRock Royalty Trust has a Zacks Rank of #2 (Buy), while Marathon Oil has a Zacks Rank of #3 (Hold). This means that PRT's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

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.

PRT currently has a forward P/E ratio of 4.35, while MRO has a forward P/E of 45.27. We also note that PRT has a PEG ratio of 0.87. 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. MRO currently has a PEG ratio of 4.28.

Another notable valuation metric for PRT 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, MRO has a P/B of 1.19.

Based on these metrics and many more, PRT holds a Value grade of B, while MRO has a Value grade of D.

PRT 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 PRT is likely the superior value option right now.


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PermRock Royalty Trust (PRT) : Free Stock Analysis Report
 
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