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Should Value Investors Buy Baytex Energy (BTE) 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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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.

Baytex Energy (BTE - Free Report) is a stock many investors are watching right now. BTE 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 6.50 right now. For comparison, its industry sports an average P/E of 7.12. Over the past 52 weeks, BTE's Forward P/E has been as high as 9.85 and as low as 4.47, with a median of 7.05.

We should also highlight that BTE has a P/B ratio of 0.92. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.39. Within the past 52 weeks, BTE's P/B has been as high as 2.28 and as low as 0.90, with a median of 1.40.

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. BTE has a P/S ratio of 0.92. This compares to its industry's average P/S of 1.04.

Finally, investors should note that BTE has a P/CF ratio of 1.97. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 3.11. BTE's P/CF has been as high as 2.93 and as low as 1.35, with a median of 2.17, all within the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Baytex Energy is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, BTE feels like a great value stock at the moment.

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