Back to top

DK vs. MUSA: Which Stock Should Value Investors Buy Now?

Read MoreHide Full Article

Investors with an interest in Oil and Gas - Refining and Marketing stocks have likely encountered both Delek US Holdings (DK - Free Report) and Murphy USA (MUSA - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's 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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Delek US Holdings is sporting a Zacks Rank of #1 (Strong Buy), while Murphy USA has a Zacks Rank of #4 (Sell). Investors should feel comfortable knowing that DK likely has seen a stronger improvement to its earnings outlook than MUSA has recently. 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.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

DK currently has a forward P/E ratio of 9.02, while MUSA has a forward P/E of 17.63. We also note that DK has a PEG ratio of 0.90. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MUSA currently has a PEG ratio of 2.84.

Another notable valuation metric for DK is its P/B ratio of 2.28. 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, MUSA has a P/B of 3.66.

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

DK has seen stronger estimate revision activity and sports more attractive valuation metrics than MUSA, so it seems like value investors will conclude that DK is the superior option right now.




In-Depth Zacks Research for the Tickers Above


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


Delek US Holdings, Inc. (DK) - free report >>

Murphy USA Inc. (MUSA) - free report >>

More from Zacks Tale of the Tape

You May Like