WFRD vs. AROC: Which Stock Should Value Investors Buy Now?

Investors interested in Oil and Gas - Field Services stocks are likely familiar with Weatherford (WFRD) and Archrock Inc. (AROC). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Weatherford has a Zacks Rank of #1 (Strong Buy), while Archrock Inc. has a Zacks Rank of #3 (Hold) right now. Investors should feel comfortable knowing that WFRD likely has seen a stronger improvement to its earnings outlook than AROC has recently. But this is just one factor that value investors are interested in.

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.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

WFRD currently has a forward P/E ratio of 16.32, while AROC has a forward P/E of 18.61. We also note that WFRD has a PEG ratio of 0.90. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. AROC currently has a PEG ratio of 1.55.

Another notable valuation metric for WFRD is its P/B ratio of 4.09. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, AROC has a P/B of 4.19.

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

WFRD stands above AROC thanks to its solid earnings outlook, and based on these valuation figures, we also feel that WFRD is the superior value option right now.

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This article originally published on Zacks Investment Research (zacks.com).

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