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RDS.A vs. CVX: Which Stock Should Value Investors Buy Now?

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Investors looking for stocks in the Oil and Gas - Integrated - International sector might want to consider either Shell Oil or Chevron (CVX - 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Shell Oil and Chevron are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that RDS.A likely has seen a stronger improvement to its earnings outlook than CVX has recently. 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 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 9.31, while CVX has a forward P/E of 19.60. We also note that RDS.A has a PEG ratio of 2.33. 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. CVX currently has a PEG ratio of 3.92.

Another notable valuation metric for RDS.A is its P/B ratio of 0.91. 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, CVX has a P/B of 1.55.

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

RDS.A stands above CVX thanks to its solid earnings outlook, and based on these valuation figures, we also feel that RDS.A is the superior value option right now.


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