Investors looking for stocks in the Oil and Gas - Integrated - International sector might want to consider either Sasol (SSL - Free Report) or Exxon Mobil (XOM - 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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Sasol has a Zacks Rank of #2 (Buy), while Exxon Mobil has a Zacks Rank of #5 (Strong Sell) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that SSL has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
SSL currently has a forward P/E ratio of 8.78, while XOM has a forward P/E of 17.69. We also note that SSL has a PEG ratio of 1.18. 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. XOM currently has a PEG ratio of 1.51.
Another notable valuation metric for SSL is its P/B ratio of 1.12. 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, XOM has a P/B of 1.54.
Based on these metrics and many more, SSL holds a Value grade of A, while XOM has a Value grade of C.
SSL is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that SSL is likely the superior value option right now.