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WES vs. CAPL: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2 mins read

Investors looking for stocks in the Oil and Gas - Refining and Marketing - Master Limited Partnerships sector might want to consider either Western Midstream (WES) or CrossAmerica Partners (CAPL). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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

Western Midstream has a Zacks Rank of #2 (Buy), while CrossAmerica Partners has a Zacks Rank of #4 (Sell) right now. Investors should feel comfortable knowing that WES likely has seen a stronger improvement to its earnings outlook than CAPL has recently. 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

WES currently has a forward P/E ratio of 6.51, while CAPL has a forward P/E of 26.34. We also note that WES has a PEG ratio of 1.09. 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. CAPL currently has a PEG ratio of 7.75.

Another notable valuation metric for WES is its P/B ratio of 1.77. 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, CAPL has a P/B of 7.96.

These metrics, and several others, help WES earn a Value grade of B, while CAPL has been given a Value grade of D.

WES sticks out from CAPL in both our Zacks Rank and Style Scores models, so value investors will likely feel that WES is the better option right now.


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Western Gas Equity Partners, LP (WES) : Free Stock Analysis Report
 
CrossAmerica Partners LP (CAPL) : Free Stock Analysis Report
 
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