Investors with an interest in Oil and Gas - Field Services stocks have likely encountered both Schlumberger (SLB) and Core Laboratories (CLB). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Both Schlumberger and Core Laboratories have a Zacks Rank of # 2 (Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies 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.
SLB currently has a forward P/E ratio of 24.10, while CLB has a forward P/E of 38.99. We also note that SLB has a PEG ratio of 0.61. 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. CLB currently has a PEG ratio of 0.80.
Another notable valuation metric for SLB is its P/B ratio of 4.17. 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, CLB has a P/B of 5.48.
Based on these metrics and many more, SLB holds a Value grade of B, while CLB has a Value grade of C.
Both SLB and CLB are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that SLB is the superior value option right now.
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