Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Tesoro Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Tesoro has a trailing twelve months PE ratio of 10.82, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.78. If we focus on the stock’s long-term PE trend, the current level puts Tesoro’s current PE ratio above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Oil and Gas - Refining and Marketing industry’s trailing twelve months PE ratio, which stands at 19.16. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Tesoro has a forward PE ratio (price relative to this year’s earnings) of just 12.10, so on the ground of the forward earnings estimates, we might say that the company’s share price is likely to appreciate in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Apple has a P/S ratio of about 0.42. This is a significantly lower than the S&P 500 average, which comes in at 2.96 right now. Also, as we can see in the chart below, this is just little below the highs for this stock in particular over the past few years.
TSO is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Tesoro currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Tesoro a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Tesoro is just 1.21, slightly lower than the industry average of 1.48. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 4.85, which is far better than the industry average of 8.07. Clearly, TSO is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Tesoro might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives TSO a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen three estimates going higher in the past sixty days compared to one lower, while the full year estimate also has seen three upward and two downward revisions in the same time period.
This has had a positive impact on the consensus estimate as the current quarter consensus estimate has significantly risen by 35% in the past two months and the full year estimate has increased by 1.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
TESORO CORP Price and Consensus
TESORO CORP Price and Consensus | TESORO CORP Quote
This bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Tesoro is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a favorable industry rank (Top 33% out of more than 250 industries) and a solid Zacks Rank, the company deserves attention right now. In fact, over the past five years, the Zacks classified Oil and Gas - Refining and Marketing industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
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Should Value Investors Buy Tesoro (TSO) Stock?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Tesoro Corporation stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Tesoro has a trailing twelve months PE ratio of 10.82, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 19.78. If we focus on the stock’s long-term PE trend, the current level puts Tesoro’s current PE ratio above its midpoint over the past five years.
Further, the stock’s PE also compares favorably with the Zacks classified Oil and Gas - Refining and Marketing industry’s trailing twelve months PE ratio, which stands at 19.16. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that Tesoro has a forward PE ratio (price relative to this year’s earnings) of just 12.10, so on the ground of the forward earnings estimates, we might say that the company’s share price is likely to appreciate in the near future.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Apple has a P/S ratio of about 0.42. This is a significantly lower than the S&P 500 average, which comes in at 2.96 right now. Also, as we can see in the chart below, this is just little below the highs for this stock in particular over the past few years.
TSO is actually in the higher zone of its trading range in the time period per the P/S metric, which suggests that the company’s stock price has already appreciated to some degree, relative to its sales.
Broad Value Outlook
In aggregate, Tesoro currently has a Zacks Value Style Score of ‘A’, putting it into the top 20% of all stocks we cover from this look. This makes Tesoro a solid choice for value investors, and some of its other key metrics make this pretty clear too.
For example, the PEG ratio for Tesoro is just 1.21, slightly lower than the industry average of 1.48. The PEG ratio is a modified PE ratio that takes into account the stock’s earnings growth rate. Additionally, its P/CF ratio (another great indicator of value) comes in at 4.85, which is far better than the industry average of 8.07. Clearly, TSO is a solid choice on the value front from multiple angles.
What About the Stock Overall?
Though Tesoro might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘C’ and a Momentum score of ‘B’. This gives TSO a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been encouraging. The current quarter has seen three estimates going higher in the past sixty days compared to one lower, while the full year estimate also has seen three upward and two downward revisions in the same time period.
This has had a positive impact on the consensus estimate as the current quarter consensus estimate has significantly risen by 35% in the past two months and the full year estimate has increased by 1.7%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
TESORO CORP Price and Consensus
TESORO CORP Price and Consensus | TESORO CORP Quote
This bullish trend is why the stock boasts a Zacks Rank #2 (Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
Tesoro is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Boasting a favorable industry rank (Top 33% out of more than 250 industries) and a solid Zacks Rank, the company deserves attention right now. In fact, over the past five years, the Zacks classified Oil and Gas - Refining and Marketing industry has clearly outperformed the broader market, as you can see below:
So, it might pay for value investors to delve deeper into the company’s prospects, as fundamentals indicate that this stock could be a compelling pick.
Zacks’ Best Private Investment Ideas
In addition to the recommendations that are available to the public on our website, how would you like to follow all Zacks' private buys and sells in real time?
Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors. Starting today, for the next month, you can have unrestricted access. Click here for Zacks' private trades >>