Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with WPX Energy (WPX) and Anadarko Petroleum (APC). 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 emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, WPX Energy has a Zacks Rank of #2 (Buy), while Anadarko Petroleum has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that WPX likely has seen a stronger improvement to its earnings outlook than APC has recently. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
WPX currently has a forward P/E ratio of 27.73, while APC has a forward P/E of 32. We also note that WPX has a PEG ratio of 0.99. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. APC currently has a PEG ratio of 4.92.
Another notable valuation metric for WPX is its P/B ratio of 1.11. 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, APC has a P/B of 3.47.
These are just a few of the metrics contributing to WPX's Value grade of B and APC's Value grade of C.
WPX 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 WPX is likely the superior value option right now.
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