Investors looking for stocks in the Oil and Gas - Integrated - International sector might want to consider either YPF Sociedad Anonima (YPF) or Fuchs Petrolub SE Unsponsored ADR (FUPBY). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both YPF Sociedad Anonima and Fuchs Petrolub SE Unsponsored ADR are holding a Zacks Rank of # 2 (Buy). Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. 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 Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
YPF currently has a forward P/E ratio of 5.88, while FUPBY has a forward P/E of 18.57. We also note that YPF has a PEG ratio of 0.13. 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. FUPBY currently has a PEG ratio of 2.21.
Another notable valuation metric for YPF is its P/B ratio of 1.27. 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, FUPBY has a P/B of 3.32.
These metrics, and several others, help YPF earn a Value grade of A, while FUPBY has been given a Value grade of C.
Both YPF and FUPBY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that YPF is the superior value option right now.
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