Investors interested in Oil and Gas - Field Services stocks are likely familiar with Ranger Energy Services, Inc. (RNGR) and Core Laboratories (CLB). But which of these two companies is the best option for those looking for undervalued stocks? 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Ranger Energy Services, Inc. has a Zacks Rank of #2 (Buy), while Core Laboratories has a Zacks Rank of #5 (Strong Sell) right now. This means that RNGR'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 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.
RNGR currently has a forward P/E ratio of 6.65, while CLB has a forward P/E of 26.39. We also note that RNGR has a PEG ratio of 1.33. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CLB currently has a PEG ratio of 1.91.
Another notable valuation metric for RNGR is its P/B ratio of 0.50. 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, CLB has a P/B of 17.25.
Based on these metrics and many more, RNGR holds a Value grade of B, while CLB has a Value grade of F.
RNGR stands above CLB thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RNGR is the superior value option right now.