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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

Petrobras (PBR - Free Report) is a stock many investors are watching right now. PBR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.

Investors should also recognize that PBR has a P/B ratio of 0.93. 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. This stock's P/B looks attractive against its industry's average P/B of 1.13. Over the past 12 months, PBR's P/B has been as high as 1.67 and as low as 0.79, with a median of 1.07.

Finally, we should also recognize that PBR has a P/CF ratio of 2.21. 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 3.52. Over the past year, PBR's P/CF has been as high as 10.63 and as low as 2.09, with a median of 4.14.

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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