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MTDR vs. CXO: Which Stock Should Value Investors Buy Now?

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Investors interested in stocks from the Oil and Gas - Exploration and Production - United States sector have probably already heard of Matador Resources (MTDR - Free Report) and Concho Resources . 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.

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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

Matador Resources and Concho Resources are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that MTDR's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.

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 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.

MTDR currently has a forward P/E ratio of 1.43, while CXO has a forward P/E of 14.23. We also note that MTDR has a PEG ratio of 0.71. 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. CXO currently has a PEG ratio of 3.25.

Another notable valuation metric for MTDR is its P/B ratio of 0.14. 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, CXO has a P/B of 0.57.

These metrics, and several others, help MTDR earn a Value grade of A, while CXO has been given a Value grade of C.

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


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