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CHK vs. TRP: Which Stock Should Value Investors Buy Now?

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Investors interested in Alternative Energy - Other stocks are likely familiar with Chesapeake Energy (CHK - Free Report) and TC Energy (TRP - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. 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.

Chesapeake Energy and TC Energy are sporting Zacks Ranks of #1 (Strong Buy) and #4 (Sell), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that CHK is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

CHK currently has a forward P/E ratio of 6.31, while TRP has a forward P/E of 15.65. We also note that CHK has a PEG ratio of 1.01. 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. TRP currently has a PEG ratio of 3.91.

Another notable valuation metric for CHK is its P/B ratio of 1.69. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, TRP has a P/B of 2.17.

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

CHK sticks out from TRP in both our Zacks Rank and Style Scores models, so value investors will likely feel that CHK is the better option right now.


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