Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put CVR Refining, LP stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, CVR Refining has a trailing twelve months PE ratio of 17.5, as you can see in the chart below:
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This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.1. If we focus on the long-term PE trend, though, CVR Refining’s current PE level puts it above its midpoint over the past three years, it is significantly below the highs for this stock, suggesting it might be a good entry point.
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Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 39.1. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
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We should also point out that CVR Refining has a forward PE ratio (price relative to this year’s earnings) of just 8.2, so it is fair to say that a slightly more value-oriented path may be ahead for CVR Refining stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CVR Refining has a P/S ratio of about 0.3. This is significantly lower than the S&P 500 average, which comes in at 3.4 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, CVR Refining currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes CVR Refining a solid choice for value investors.
What About the Stock Overall?
Though CVR Refining might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of C. This gives CVRR a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending higher. The current quarter as well as the full year has seen one estimate go higher in the past sixty days compared to none lower.
As a result, the current quarter consensus estimate has risen by more than 85% in the past two months, while the full year estimate has increased 23.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
CVR Refining is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Its strong Zacks Rank also indicates robust growth potential in the near future. However, the company’s prospects might be constrained due to adverse broader factors, as it has a sluggish industry rank (Bottom 34% out of more than 250 industries). In fact, over the past three years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is CVR Refining (CVRR) a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
.jpg)
.jpg)
.jpg)
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put CVR Refining, LP stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, CVR Refining has a trailing twelve months PE ratio of 17.5, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 21.1. If we focus on the long-term PE trend, though, CVR Refining’s current PE level puts it above its midpoint over the past three years, it is significantly below the highs for this stock, suggesting it might be a good entry point.
Further, the stock’s PE also compares favorably with the industry’s trailing twelve months PE ratio, which stands at 39.1. At the very least, this indicates that the stock is relatively undervalued right now, compared to its peers.
We should also point out that CVR Refining has a forward PE ratio (price relative to this year’s earnings) of just 8.2, so it is fair to say that a slightly more value-oriented path may be ahead for CVR Refining stock in the near term too.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, CVR Refining has a P/S ratio of about 0.3. This is significantly lower than the S&P 500 average, which comes in at 3.4 right now. Also, as we can see in the chart below, this is slightly below the highs for this stock in particular over the past few years.
As we can see, the stock is trading at its median value for the time period from a P/S metric. This does not provide us with a conclusive direction as to the relative valuation of the stock in comparison to its historical trend.
Broad Value Outlook
In aggregate, CVR Refining currently has a Zacks Value Style Score of A, putting it into the top 20% of all stocks we cover from this look. This makes CVR Refining a solid choice for value investors.
What About the Stock Overall?
Though CVR Refining might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of A and a Momentum score of C. This gives CVRR a Zacks VGM score—or its overarching fundamental grade—of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been trending higher. The current quarter as well as the full year has seen one estimate go higher in the past sixty days compared to none lower.
As a result, the current quarter consensus estimate has risen by more than 85% in the past two months, while the full year estimate has increased 23.4%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
CVR Refining, LP Price and Consensus
CVR Refining, LP Price and Consensus | CVR Refining, LP Quote
This bullish trend is why the stock boasts a Zacks Rank #1 (Strong Buy) and why we are expecting outperformance from the company in the near term.
Bottom Line
CVR Refining is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. Its strong Zacks Rank also indicates robust growth potential in the near future. However, the company’s prospects might be constrained due to adverse broader factors, as it has a sluggish industry rank (Bottom 34% out of more than 250 industries). In fact, over the past three years, the industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
Zacks’ Best Private Investment Ideas
While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.
Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.
Click here for Zacks' private trades >>