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Are Investors Undervaluing These Oils-Energy Stocks Right Now?

Zacks Equity Research
·3-min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

One company value investors might notice is PetroChina (PTR). PTR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock is trading with P/E ratio of 6.06 right now. For comparison, its industry sports an average P/E of 8.83. PTR's Forward P/E has been as high as 22.38 and as low as 5.58, with a median of 7.32, all within the past year.

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Another valuation metric that we should highlight is PTR's P/B ratio of 0.44. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.23. Over the past 12 months, PTR's P/B has been as high as 0.46 and as low as 0.28, with a median of 0.37.

Another great Oil and Gas - Integrated - International stock you could consider is Royal Dutch Shell (RDS.A), which is a # 2 (Buy) stock with a Value Score of A.

Royal Dutch Shell is currently trading with a Forward P/E ratio of 7.46 while its PEG ratio sits at 1.86. Both of the company's metrics compare favorably to its industry's average P/E of 8.83 and average PEG ratio of 0.63.

RDS.A's price-to-earnings ratio has been as high as 12.95 and as low as 6.46, with a median of 7.93, while its PEG ratio has been as high as 3.24 and as low as 1.62, with a median of 1.98, all within the past year.

Additionally, Royal Dutch Shell has a P/B ratio of 1.19 while its industry's price-to-book ratio sits at 1.23. For RDS.A, this valuation metric has been as high as 1.19, as low as 0.85, with a median of 0.95 over the past year.

These are just a handful of the figures considered in PetroChina and Royal Dutch Shell's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PTR and RDS.A is an impressive value stock right now.


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PetroChina Company Limited (PTR) : Free Stock Analysis Report
 
Royal Dutch Shell PLC (RDS.A) : Free Stock Analysis Report
 
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