Investors looking for stocks in the Oil and Gas - Exploration and Production - United States sector might want to consider either Venture Global (VG) or Cheniere Energy (LNG). 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 is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, Venture Global has a Zacks Rank of #2 (Buy), while Cheniere Energy has a Zacks Rank of #3 (Hold). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that VG is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle 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.
VG currently has a forward P/E ratio of 7.21, while LNG has a forward P/E of 20. We also note that VG has a PEG ratio of 0.30. 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. LNG currently has a PEG ratio of 4.52.
Another notable valuation metric for VG is its P/B ratio of 3.55. 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, LNG has a P/B of 5.18.
Based on these metrics and many more, VG holds a Value grade of B, while LNG has a Value grade of D.
VG 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 VG is likely the superior value option right now.
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Venture Global, Inc. (VG): Free Stock Analysis Report Cheniere Energy, Inc. (LNG): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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