COP or WHD: Which Is the Better Value Stock Right Now?

Investors interested in Oil and Gas - Integrated - United States stocks are likely familiar with ConocoPhillips (COP) and Cactus, Inc. (WHD). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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.

ConocoPhillips and Cactus, Inc. are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that COP has an improving earnings outlook. However, value investors will care about much more than just this.

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.

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.

COP currently has a forward P/E ratio of 12.18, while WHD has a forward P/E of 20.97. We also note that COP has a PEG ratio of 1.35. 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. WHD currently has a PEG ratio of 1.72.

Another notable valuation metric for COP is its P/B ratio of 2.38. 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, WHD has a P/B of 3.52.

Based on these metrics and many more, COP holds a Value grade of B, while WHD has a Value grade of C.

COP 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 COP is likely the superior value option right now.

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

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