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Should Value Investors Buy Liberty Energy (LBRT) Stock?
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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
Liberty Energy (LBRT - Free Report) is a stock many investors are watching right now. LBRT is currently sporting a Zacks Rank of #2 (Buy) and an A for Value.
Investors should also recognize that LBRT has a P/B ratio of 1.90. 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. LBRT's current P/B looks attractive when compared to its industry's average P/B of 2.69. Over the past 12 months, LBRT's P/B has been as high as 2.84 and as low as 1.58, with a median of 2.06.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. LBRT has a P/S ratio of 0.74. This compares to its industry's average P/S of 0.94.
Finally, our model also underscores that LBRT has a P/CF ratio of 5.59. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 12.35. LBRT's P/CF has been as high as 33.38 and as low as 4.84, with a median of 9.45, all within the past year.
ProPetro Holding (PUMP - Free Report) may be another strong Oil and Gas - Field Services stock to add to your shortlist. PUMP is a # 1 (Strong Buy) stock with a Value grade of A.
ProPetro Holding sports a P/B ratio of 1.27 as well; this compares to its industry's price-to-book ratio of 2.69. In the past 52 weeks, PUMP's P/B has been as high as 1.99, as low as 0.94, with a median of 1.37.
These are only a few of the key metrics included in Liberty Energy and ProPetro Holding strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, LBRT and PUMP look like an impressive value stock at the moment.