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GPOR vs. SM: Which Stock Is the Better Value Option?

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Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with Gulfport Energy (GPOR - Free Report) and SM Energy (SM - Free Report) . 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.

Gulfport Energy and SM Energy are sporting Zacks Ranks of #2 (Buy) and #5 (Strong Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that GPOR is likely seeing its earnings outlook improve to a greater extent. However, value investors will care about much more than just this.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

GPOR currently has a forward P/E ratio of 4.90, while SM has a forward P/E of 15.90. We also note that GPOR has a PEG ratio of 0.36. 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. SM currently has a PEG ratio of 1.59.

Another notable valuation metric for GPOR is its P/B ratio of 0.37. 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, SM has a P/B of 0.66.

These metrics, and several others, help GPOR earn a Value grade of A, while SM has been given a Value grade of C.

GPOR has seen stronger estimate revision activity and sports more attractive valuation metrics than SM, so it seems like value investors will conclude that GPOR is the superior option right now.


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