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Should Value Investors Buy Petrobras (PBR) Stock?

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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 company to watch right now is Petrobras (PBR - Free Report) . PBR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.

Another valuation metric that we should highlight is PBR's P/B ratio of 1.05. The P/B is a method of comparing a stock's market value to 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 1.62. Over the past year, PBR's P/B has been as high as 1.44 and as low as 0.38, with a median of 1.25.

Finally, investors will want to recognize that PBR has a P/CF ratio of 6. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. PBR's P/CF compares to its industry's average P/CF of 17.95. Within the past 12 months, PBR's P/CF has been as high as 7.70 and as low as 1.13, with a median of 4.19.

Value investors will likely look at more than just these metrics, but the above data helps show that Petrobras is likely undervalued currently. And when considering the strength of its earnings outlook, PBR sticks out at as one of the market's strongest value stocks.


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