DTI vs. CLB: Which Stock Is the Better Value Option?
Investors interested in stocks from the Oil and Gas - Field Services sector have probably already heard of Drilling Tools International Corp. (DTI) and Core Laboratories (CLB). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
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.
Currently, Drilling Tools International Corp. has a Zacks Rank of #1 (Strong Buy), while Core Laboratories has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DTI has an improving earnings outlook. But this is only part of the picture for value investors.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether 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.
DTI currently has a forward P/E ratio of 18.95, while CLB has a forward P/E of 20.92. We also note that DTI has a PEG ratio of 2.11. 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. CLB currently has a PEG ratio of 14.33.
Another notable valuation metric for DTI is its P/B ratio of 1.03. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, CLB has a P/B of 2.81.
Based on these metrics and many more, DTI holds a Value grade of B, while CLB has a Value grade of C.
DTI sticks out from CLB in both our Zacks Rank and Style Scores models, so value investors will likely feel that DTI is the better option right now.
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