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Should Value Investors Buy Earthstone Energy (ESTE) 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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Earthstone Energy . ESTE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 1.99, which compares to its industry's average of 5.72. Over the past year, ESTE's Forward P/E has been as high as 9.21 and as low as 1.51, with a median of 4.02.

Finally, investors will want to recognize that ESTE has a P/CF ratio of 4.57. 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. ESTE's current P/CF looks attractive when compared to its industry's average P/CF of 8.05. Within the past 12 months, ESTE's P/CF has been as high as 11.06 and as low as 3.44, with a median of 5.49.

Another great Oil and Gas - Exploration and Production - United States stock you could consider is SilverBow Resources (SBOW - Free Report) , which is a # 1 (Strong Buy) stock with a Value Score of A.

Furthermore, SilverBow Resources holds a P/B ratio of 1.17 and its industry's price-to-book ratio is 3.38. SBOW's P/B has been as high as 5.26, as low as 0.91, with a median of 1.81 over the past 12 months.

Value investors will likely look at more than just these metrics, but the above data helps show that Earthstone Energy and SilverBow Resources are likely undervalued currently. And when considering the strength of its earnings outlook, ESTE and SBOW sticks out as one of the market's strongest value stocks.


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