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MRO vs. DTM: Which Stock Should Value Investors Buy Now?

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Investors interested in Oil and Gas - Integrated - United States stocks are likely familiar with Marathon Oil (MRO - Free Report) and DT Midstream, Inc. (DTM - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, both Marathon Oil and DT Midstream, Inc. are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. However, value investors will care about much more than just this.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when 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.

MRO currently has a forward P/E ratio of 14.35, while DTM has a forward P/E of 16.21. We also note that MRO has a PEG ratio of 0.48. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. DTM currently has a PEG ratio of 4.05.

Another notable valuation metric for MRO is its P/B ratio of 1.20. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, DTM has a P/B of 1.21.

These metrics, and several others, help MRO earn a Value grade of B, while DTM has been given a Value grade of C.

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


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