Investors interested in stocks from the Oil and Gas - Mechanical and and Equipment sector have probably already heard of National Energy Services Reunited (NESR) and Kodiak Gas Services (KGS). 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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
National Energy Services Reunited has a Zacks Rank of #1 (Strong Buy), while Kodiak Gas Services has a Zacks Rank of #3 (Hold) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that NESR is likely seeing its earnings outlook improve to a greater extent. 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.
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.
NESR currently has a forward P/E ratio of 16.13, while KGS has a forward P/E of 28.69. We also note that NESR has a PEG ratio of 0.32. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. KGS currently has a PEG ratio of 1.02.
Another notable valuation metric for NESR is its P/B ratio of 2.84. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, KGS has a P/B of 4.77.
These are just a few of the metrics contributing to NESR's Value grade of B and KGS's Value grade of C.
NESR sticks out from KGS in both our Zacks Rank and Style Scores models, so value investors will likely feel that NESR is the better option right now.
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National Energy Services Reunited (NESR): Free Stock Analysis Report
Kodiak Gas Services, Inc. (KGS): Free Stock Analysis Report
This article originally published on Zacks Investment Research (zacks.com).