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MRO vs. OXY: Which Stock Is the Better Value Option?

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Investors interested in Oil and Gas - Integrated - United States stocks are likely familiar with Marathon Oil (MRO) and Occidental Petroleum (OXY). But which of these two stocks presents investors with the better value opportunity right now? 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Currently, Marathon Oil has a Zacks Rank of #2 (Buy), while Occidental Petroleum has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that MRO has an improving earnings outlook. But this is just one piece of the puzzle for value investors.

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 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.

MRO currently has a forward P/E ratio of 20.57, while OXY has a forward P/E of 33.90. We also note that MRO has a PEG ratio of 2.65. 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. OXY currently has a PEG ratio of 6.78.

Another notable valuation metric for MRO is its P/B ratio of 0.62. 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, OXY has a P/B of 1.13.

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

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

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