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RDS.A vs. XOM: Which Stock Is the Better Value Option?

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Investors interested in stocks from the Oil and Gas - Integrated - International sector have probably already heard of Shell Oil and Exxon Mobil (XOM - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Shell Oil and Exxon Mobil are both sporting a Zacks Rank of # 1 (Strong Buy) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that both of these companies have improving earnings outlooks. But this is just one factor that value investors are interested in.

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 highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

RDS.A currently has a forward P/E ratio of 11.19, while XOM has a forward P/E of 23.99. We also note that RDS.A has a PEG ratio of 2.80. 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. XOM currently has a PEG ratio of 3.80.

Another notable valuation metric for RDS.A is its P/B ratio of 0.89. 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, XOM has a P/B of 1.11.

These are just a few of the metrics contributing to RDS.A's Value grade of A and XOM's Value grade of C.

Both RDS.A and XOM are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RDS.A is the superior value option right now.


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