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Are Investors Undervaluing Eclipse Resources (MR) Right Now?

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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.

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.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Eclipse Resources (MR - Free Report) is a stock many investors are watching right now. MR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. MR has a P/S ratio of 0.93. This compares to its industry's average P/S of 1.44.

Finally, we should also recognize that MR has a P/CF ratio of 1.80. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.12. Over the past year, MR's P/CF has been as high as 6.84 and as low as 1.75, with a median of 3.64.

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




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