Back to top

Image: Bigstock

MRO or WHD: Which Is the Better Value Stock Right Now?

Read MoreHide Full Article

Investors looking for stocks in the Oil and Gas - Integrated - United States sector might want to consider either Marathon Oil (MRO - Free Report) or Cactus, Inc. (WHD - 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.

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.

Marathon Oil has a Zacks Rank of #2 (Buy), while Cactus, Inc. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that MRO likely has seen a stronger improvement to its earnings outlook than WHD has recently. However, value investors will care about much more than just this.

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.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

MRO currently has a forward P/E ratio of 4.37, while WHD has a forward P/E of 24.45. We also note that MRO has a PEG ratio of 0.30. 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. WHD currently has a PEG ratio of 0.44.

Another notable valuation metric for MRO is its P/B ratio of 1.40. 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, WHD has a P/B of 4.90.

Based on these metrics and many more, MRO holds a Value grade of A, while WHD has a Value grade of D.

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

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Marathon Oil Corporation (MRO) - free report >>

Cactus, Inc. (WHD) - free report >>

Published in