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SSL vs. CVX: 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 Sasol (SSL - Free Report) and Chevron (CVX - 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.

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 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.

Both Sasol and Chevron have a Zacks Rank of # 2 (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. However, value investors will care about much more than just this.

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.

SSL currently has a forward P/E ratio of 6.13, while CVX has a forward P/E of 12.84. We also note that SSL has a PEG ratio of 0.38. 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 0.98.

Another notable valuation metric for SSL is its P/B ratio of 1.38. 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, CVX has a P/B of 2.26.

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

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


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