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RRC vs. PXD: Which Stock Is the Better Value Option?

Zacks Equity Research
Updated
Kinder Morgan (KMI) reported earnings 30 days ago. What's next for the stock? We take a look at earnings estimates for some clues.

Investors with an interest in Oil and Gas - Exploration and Production - United States stocks have likely encountered both Range Resources (RRC) and Pioneer Natural Resources (PXD). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Right now, Range Resources is sporting a Zacks Rank of #2 (Buy), while Pioneer Natural Resources has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that RRC has an improving earnings outlook. 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.

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Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

RRC currently has a forward P/E ratio of 15.69, while PXD has a forward P/E of 25.37. We also note that RRC has a PEG ratio of 1.25. 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. PXD currently has a PEG ratio of 1.82.

Another notable valuation metric for RRC is its P/B ratio of 0.74. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, PXD has a P/B of 2.64.

Based on these metrics and many more, RRC holds a Value grade of A, while PXD has a Value grade of C.

RRC has seen stronger estimate revision activity and sports more attractive valuation metrics than PXD, so it seems like value investors will conclude that RRC is the superior option right now.


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Range Resources Corporation (RRC) : Free Stock Analysis Report
 
Pioneer Natural Resources Company (PXD) : Free Stock Analysis Report
 
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