AR or EOG: Which Is the Better Value Stock Right Now?
Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with Antero Resources (AR) and EOG Resources (EOG). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Right now, Antero Resources is sporting a Zacks Rank of #1 (Strong Buy), while EOG Resources has a Zacks Rank of #3 (Hold). This means that AR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is just one factor that value investors are interested in.
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.
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.
AR currently has a forward P/E ratio of 10.57, while EOG has a forward P/E of 20.39. We also note that AR has a PEG ratio of 0.53. 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. EOG currently has a PEG ratio of 1.39.
Another notable valuation metric for AR is its P/B ratio of 0.31. 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, EOG has a P/B of 2.96.
These metrics, and several others, help AR earn a Value grade of A, while EOG has been given a Value grade of C.
AR stands above EOG thanks to its solid earnings outlook, and based on these valuation figures, we also feel that AR is the superior value option right now.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.