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Should Value Investors Buy These Oils-Energy Stocks?
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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 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 SM Energy (SM - Free Report) . SM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.92, which compares to its industry's average of 7.19. Over the past year, SM's Forward P/E has been as high as 7,306.98 and as low as -8,111.08, with a median of 7.11.
Investors should also recognize that SM has a P/B ratio of 2.45. 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 3.21. Within the past 52 weeks, SM's P/B has been as high as 2.79 and as low as 0.47, with a median of 1.49.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SM has a P/S ratio of 1.82. This compares to its industry's average P/S of 2.55.
Finally, investors should note that SM has a P/CF ratio of 17.95. 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. SM's P/CF compares to its industry's average P/CF of 31.31. Over the past 52 weeks, SM's P/CF has been as high as 134.89 and as low as 13.55, with a median of 19.95.
Another great Oil and Gas - Exploration and Production - United States stock you could consider is Stone Energy (TALO - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.
Furthermore, Stone Energy holds a P/B ratio of 1.24 and its industry's price-to-book ratio is 3.21. TALO's P/B has been as high as 1.96, as low as 0.74, with a median of 1.31 over the past 12 months.
These are only a few of the key metrics included in SM Energy and Stone Energy strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, SM and TALO look like an impressive value stock at the moment.
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Should Value Investors Buy These Oils-Energy Stocks?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 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 SM Energy (SM - Free Report) . SM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.92, which compares to its industry's average of 7.19. Over the past year, SM's Forward P/E has been as high as 7,306.98 and as low as -8,111.08, with a median of 7.11.
Investors should also recognize that SM has a P/B ratio of 2.45. 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 3.21. Within the past 52 weeks, SM's P/B has been as high as 2.79 and as low as 0.47, with a median of 1.49.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SM has a P/S ratio of 1.82. This compares to its industry's average P/S of 2.55.
Finally, investors should note that SM has a P/CF ratio of 17.95. 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. SM's P/CF compares to its industry's average P/CF of 31.31. Over the past 52 weeks, SM's P/CF has been as high as 134.89 and as low as 13.55, with a median of 19.95.
Another great Oil and Gas - Exploration and Production - United States stock you could consider is Stone Energy (TALO - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.
Furthermore, Stone Energy holds a P/B ratio of 1.24 and its industry's price-to-book ratio is 3.21. TALO's P/B has been as high as 1.96, as low as 0.74, with a median of 1.31 over the past 12 months.
These are only a few of the key metrics included in SM Energy and Stone Energy strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, SM and TALO look like an impressive value stock at the moment.