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RDS.A or XOM: Which Is the Better Value Stock Right Now?

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Investors with an interest in Oil and Gas - Integrated - International stocks have likely encountered both Shell Oil and Exxon Mobil (XOM - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Both Shell Oil and Exxon Mobil have a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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 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 12.07, while XOM has a forward P/E of 24.12. We also note that RDS.A has a PEG ratio of 3.02. 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. XOM currently has a PEG ratio of 3.27.

Another notable valuation metric for RDS.A is its P/B ratio of 1.06. 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, XOM has a P/B of 1.54.

Based on these metrics and many more, RDS.A holds a Value grade of B, while XOM has a Value grade of F.

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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