Investors looking for stocks in the Oil and Gas - Exploration and Production - United States sector might want to consider either Gulfport Energy (GPOR) or Earthstone Energy (ESTE). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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, Gulfport Energy is sporting a Zacks Rank of #2 (Buy), while Earthstone Energy has a Zacks Rank of #3 (Hold). Investors should feel comfortable knowing that GPOR likely has seen a stronger improvement to its earnings outlook than ESTE has recently. However, value investors will care about much more than just this.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
GPOR currently has a forward P/E ratio of 5.01, while ESTE has a forward P/E of 11.81. We also note that GPOR has a PEG ratio of 0.37. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. ESTE currently has a PEG ratio of 0.39.
Another notable valuation metric for GPOR is its P/B ratio of 0.46. 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, ESTE has a P/B of 0.64.
Based on these metrics and many more, GPOR holds a Value grade of A, while ESTE has a Value grade of C.
GPOR 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 GPOR is likely the superior value option right now.