Is Stone Energy (TALO) Stock Undervalued Right Now?

TALO

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One stock to keep an eye on is Stone Energy (TALO - Free Report) . TALO is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with a P/E ratio of 3.95, which compares to its industry's average of 5.58. Over the last 12 months, TALO's Forward P/E has been as high as 4,178.09 and as low as -3,307.81, with a median of 6.70.

Investors should also recognize that TALO has a P/B ratio of 2.24. 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. This company's current P/B looks solid when compared to its industry's average P/B of 3.52. Over the past 12 months, TALO's P/B has been as high as 2.99 and as low as 1.05, with a median of 1.53.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. TALO has a P/S ratio of 1.01. This compares to its industry's average P/S of 2.26.

Finally, investors should note that TALO has a P/CF ratio of 4.61. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 11.60. Over the past 52 weeks, TALO's P/CF has been as high as 6.14 and as low as -5.04, with a median of -3.09.

Whiting Petroleum may be another strong Oil and Gas - Exploration and Production - United States stock to add to your shortlist. WLL is a # 1 (Strong Buy) stock with a Value grade of A.

Whiting Petroleum also has a P/B ratio of 1.89 compared to its industry's price-to-book ratio of 3.52. Over the past year, its P/B ratio has been as high as 2.43, as low as 1.32, with a median of 1.83.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Stone Energy and Whiting Petroleum are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TALO and WLL feels like a great value stock at the moment.

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