Investors interested in stocks from the Oil and Gas - Field Services sector have probably already heard of Weatherford (WFRD) and Archrock Inc. (AROC). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. 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.
Weatherford has a Zacks Rank of #2 (Buy), while Archrock Inc. has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WFRD has an improving earnings outlook. But this is just one factor that value investors are interested in.
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 grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
WFRD currently has a forward P/E ratio of 13.54, while AROC has a forward P/E of 19.33. We also note that WFRD has a PEG ratio of 0.74. 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. AROC currently has a PEG ratio of 1.61.
Another notable valuation metric for WFRD is its P/B ratio of 3.39. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AROC has a P/B of 4.25.
These metrics, and several others, help WFRD earn a Value grade of A, while AROC has been given a Value grade of C.
WFRD sticks out from AROC in both our Zacks Rank and Style Scores models, so value investors will likely feel that WFRD is the better option right now.
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See Stocks Now >>Weatherford International PLC (WFRD) : Free Stock Analysis Report
Archrock, Inc. (AROC) : Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
