Investors with an interest in Oil and Gas - Field Services stocks have likely encountered both ProPetro Holding (PUMP) and Core Laboratories (CLB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
ProPetro Holding has a Zacks Rank of #2 (Buy), while Core Laboratories has a Zacks Rank of #3 (Hold) right now. This means that PUMP's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
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 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.
PUMP currently has a forward P/E ratio of 9.35, while CLB has a forward P/E of 32.78. We also note that PUMP has a PEG ratio of 1.59. 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. CLB currently has a PEG ratio of 2.46.
Another notable valuation metric for PUMP is its P/B ratio of 2.34. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, CLB has a P/B of 18.55.
Based on these metrics and many more, PUMP holds a Value grade of A, while CLB has a Value grade of C.
PUMP 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 PUMP is likely the superior value option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
ProPetro Holding Corp. (PUMP): Free Stock Analysis Report
Core Laboratories N.V. (CLB): Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.