SSL vs. CVX: Which Stock Is the Better Value Option?

Investors with an interest in Oil and Gas - Integrated - International stocks have likely encountered both Sasol (SSL) 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.

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 proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, both Sasol and Chevron are sporting a Zacks Rank of #2 (Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

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.

SSL currently has a forward P/E ratio of 7.80, while CVX has a forward P/E of 26.24. We also note that SSL has a PEG ratio of 1.10. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. CVX currently has a PEG ratio of 1.76.

Another notable valuation metric for SSL is its P/B ratio of 0.9. 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, CVX has a P/B of 2.21.

These are just a few of the metrics contributing to SSL's Value grade of A and CVX's Value grade of C.

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

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Sasol Ltd. (SSL): Free Stock Analysis Report

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This article originally published on Zacks Investment Research (zacks.com).

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