Back to top

AR vs. CXO: Which Stock Is the Better Value Option?

Read MoreHide Full Article

Investors looking for stocks in the Oil and Gas - Exploration and Production - United States sector might want to consider either Antero Resources (AR - Free Report) or Concho Resources (CXO - 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.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. 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.

Antero Resources and Concho Resources are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that AR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. 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.

AR currently has a forward P/E ratio of 11.74, while CXO has a forward P/E of 24.50. We also note that AR has a PEG ratio of 0.59. 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. CXO currently has a PEG ratio of 0.85.

Another notable valuation metric for AR is its P/B ratio of 0.47. 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, CXO has a P/B of 1.40.

Based on these metrics and many more, AR holds a Value grade of A, while CXO has a Value grade of C.

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




In-Depth Zacks Research for the Tickers Above


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


Antero Resources Corporation (AR) - free report >>

Concho Resources Inc. (CXO) - free report >>

More from Zacks Tale of the Tape

You May Like

Published in