Investors with an interest in Oil and Gas - Exploration and Production - United States stocks have likely encountered both WPX Energy (WPX) and Cheniere Energy (LNG). 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Currently, WPX Energy has a Zacks Rank of #2 (Buy), while Cheniere Energy has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that WPX has an improving earnings 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.
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.
WPX currently has a forward P/E ratio of 14.69, while LNG has a forward P/E of 23.63. We also note that WPX has a PEG ratio of 0.52. 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. LNG currently has a PEG ratio of 0.84.
Another notable valuation metric for WPX is its P/B ratio of 1.07. 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, LNG has a P/B of 10.07.
Based on these metrics and many more, WPX holds a Value grade of A, while LNG has a Value grade of C.
WPX 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 WPX is likely the superior value option right now.
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WPX Energy, Inc. (WPX) : Free Stock Analysis Report
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