Back to top

Image: Bigstock

PDCE vs. RRC: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors interested in Oil and Gas - Exploration and Production - United States stocks are likely familiar with PDC Energy (PDCE - Free Report) and Range Resources (RRC - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Currently, PDC Energy has a Zacks Rank of #1 (Strong Buy), while Range Resources has a Zacks Rank of #4 (Sell). This means that PDCE's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst 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.

PDCE currently has a forward P/E ratio of 8.08, while RRC has a forward P/E of 11.54. We also note that PDCE has a PEG ratio of 0.21. 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 0.64.

Another notable valuation metric for PDCE is its P/B ratio of 0.83. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, RRC has a P/B of 1.42.

These are just a few of the metrics contributing to PDCE's Value grade of B and RRC's Value grade of C.

PDCE 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 PDCE is likely the superior value option right now.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

PDC Energy, Inc. (PDCE) - free report >>

Range Resources Corporation (RRC) - free report >>

Published in