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RDS.A vs. CVX: Which Stock Should Value Investors Buy Now?

Zacks Equity Research
·2-min read

Investors interested in Oil and Gas - Integrated - International stocks are likely familiar with Shell Oil (RDS.A) and Chevron (CVX). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Shell Oil and Chevron are sporting a Zacks Rank of # 1 (Strong Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.

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.

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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.

RDS.A currently has a forward P/E ratio of 9.44, while CVX has a forward P/E of 20.53. We also note that RDS.A has a PEG ratio of 2.36. 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. CVX currently has a PEG ratio of 4.11.

Another notable valuation metric for RDS.A is its P/B ratio of 0.96. 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, CVX has a P/B of 1.45.

These metrics, and several others, help RDS.A earn a Value grade of B, while CVX has been given a Value grade of F.

Both RDS.A and CVX are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that RDS.A is the superior value option right now.


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Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
Chevron Corporation (CVX) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.