Back to top

Image: Bigstock

Is DCP Midstream Partners (DCP) Stock Undervalued Right Now?

Read MoreHide Full Article

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is DCP Midstream Partners (DCP - Free Report) . DCP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 8.25 right now. For comparison, its industry sports an average P/E of 15.47. Over the past 52 weeks, DCP's Forward P/E has been as high as 30.57 and as low as 6.94, with a median of 9.13.

Another valuation metric that we should highlight is DCP's P/B ratio of 1.40. 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 solid versus its industry's average P/B of 1.86. Over the past year, DCP's P/B has been as high as 1.61 and as low as 1.02, with a median of 1.25.

Finally, we should also recognize that DCP has a P/CF ratio of 9.19. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.73. Over the past year, DCP's P/CF has been as high as 13.31 and as low as 7.45, with a median of 9.32.

Another great Oil and Gas - Production and Pipelines stock you could consider is Transportadora De Gas Ord B (TGS - Free Report) , which is a # 2 (Buy) stock with a Value Score of A.

Additionally, Transportadora De Gas Ord B has a P/B ratio of 0.63 while its industry's price-to-book ratio sits at 1.86. For TGS, this valuation metric has been as high as 0.88, as low as 0.50, with a median of 0.70 over the past year.

These are just a handful of the figures considered in DCP Midstream Partners and Transportadora De Gas Ord B's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that DCP and TGS is an impressive value stock right now.


In-Depth Zacks Research for the Tickers Above


Normally $25 each - click below to receive one report FREE:


Transportadora De Gas Sa Ord B (TGS) - free report >>

DCP Midstream Partners, LP (DCP) - free report >>

Published in