EQT vs. DEN: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Oil and Gas - Exploration and Production - United States sector have probably already heard of EQT Corporation (EQT) and Denbury (DEN). 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 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.
EQT Corporation has a Zacks Rank of #2 (Buy), while Denbury has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that EQT has an improving earnings outlook. But this is just one piece of the puzzle for value investors.
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 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.
EQT currently has a forward P/E ratio of 12.30, while DEN has a forward P/E of 12.90. We also note that EQT has a PEG ratio of 0.24. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. DEN currently has a PEG ratio of 0.55.
Another notable valuation metric for EQT is its P/B ratio of 1.92. 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, DEN has a P/B of 3.52.
These metrics, and several others, help EQT earn a Value grade of B, while DEN has been given a Value grade of C.
EQT has seen stronger estimate revision activity and sports more attractive valuation metrics than DEN, so it seems like value investors will conclude that EQT is the superior option right now.
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EQT Corporation (EQT) : Free Stock Analysis Report
Denbury Inc. (DEN) : Free Stock Analysis Report
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