Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with Concho Resources (CXO) 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Right now, both Concho Resources and Pioneer Natural Resources are sporting a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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.
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.
CXO currently has a forward P/E ratio of 11.27, while PXD has a forward P/E of 50.41. We also note that CXO has a PEG ratio of 0.94. 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 6.93.
Another notable valuation metric for CXO is its P/B ratio of 1.15. 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, PXD has a P/B of 1.29.
These metrics, and several others, help CXO earn a Value grade of B, while PXD has been given a Value grade of C.
Both CXO and PXD are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that CXO is the superior value option right now.
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Concho Resources Inc. (CXO): Free Stock Analysis Report
Pioneer Natural Resources Company (PXD): Free Stock Analysis Report
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