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Should Value Investors Buy BP (BP) Stock?

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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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One company value investors might notice is BP (BP - Free Report) . BP is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 6.14 right now. For comparison, its industry sports an average P/E of 7.91. Over the past year, BP's Forward P/E has been as high as 7.08 and as low as 3.80, with a median of 5.04.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BP has a P/S ratio of 0.49. This compares to its industry's average P/S of 0.7.

Investors could also keep in mind Eni (E - Free Report) , an Oil and Gas - Integrated - International stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Eni is currently trading with a Forward P/E ratio of 5.09 while its PEG ratio sits at 0.44. Both of the company's metrics compare favorably to its industry's average P/E of 7.91 and average PEG ratio of 0.55.

Over the past year, E's P/E has been as high as 8.22, as low as 3.12, with a median of 4.53; its PEG ratio has been as high as 0.80, as low as 0.30, with a median of 0.87 during the same time period.

Eni sports a P/B ratio of 0.97 as well; this compares to its industry's price-to-book ratio of 1.41. In the past 52 weeks, E's P/B has been as high as 1.11, as low as 0.65, with a median of 0.90.

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


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