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Are Investors Undervaluing Ecopetrol (EC) Right Now?

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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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company value investors might notice is Ecopetrol (EC - Free Report) . EC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 10.59, which compares to its industry's average of 30.58. Over the past year, EC's Forward P/E has been as high as 24.64 and as low as 3.90, with a median of 13.65.

Another notable valuation metric for EC is its P/B ratio of 1.46. 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. EC's current P/B looks attractive when compared to its industry's average P/B of 1.62. Over the past 12 months, EC's P/B has been as high as 1.73 and as low as 0.17, with a median of 1.38.

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


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