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Investors looking for stocks in the Oil and Gas - Exploration and Production - United States sector might want to consider either Permian Resources (PR) or Range Resources (RRC). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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.
Right now, Permian Resources is sporting a Zacks Rank of #2 (Buy), while Range Resources has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PR is likely seeing its earnings outlook improve to a greater extent. But this is only part of the picture for value investors.
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.
PR currently has a forward P/E ratio of 8.04, while RRC has a forward P/E of 12.14. We also note that PR has a PEG ratio of 3.62. 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. RRC currently has a PEG ratio of 4.67.
Another notable valuation metric for PR is its P/B ratio of 1.04. 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, RRC has a P/B of 2.39.
Based on these metrics and many more, PR holds a Value grade of B, while RRC has a Value grade of D.
PR 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 PR is likely the superior value option right now.
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Permian Resources Corporation (PR) : Free Stock Analysis Report
Range Resources Corporation (RRC) : Free Stock Analysis Report