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Is Petroleo Brasileiro (PBR) a Great Value Stock Right Now?

·3-min read

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

One stock to keep an eye on is Petroleo Brasileiro (PBR). PBR is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.

Investors should also recognize that PBR has a P/B ratio of 1.03. 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 stock's P/B looks attractive against its industry's average P/B of 1.04. Within the past 52 weeks, PBR's P/B has been as high as 1.41 and as low as 0.86, with a median of 1.03.

Finally, investors will want to recognize that PBR has a P/CF ratio of 2.35. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PBR's P/CF compares to its industry's average P/CF of 2.59. PBR's P/CF has been as high as 3.64 and as low as 1.69, with a median of 2.34, all within the past year.

China Petroleum & Chemical (SNP) may be another strong Oil and Gas - Integrated - Emerging Markets stock to add to your shortlist. SNP is a # 2 (Buy) stock with a Value grade of A.

China Petroleum & Chemical is trading at a forward earnings multiple of 5.03 at the moment, with a PEG ratio of 1.53. This compares to its industry's average P/E of 2.71 and average PEG ratio of 0.20.

SNP's Forward P/E has been as high as 7.12 and as low as 4.23, with a median of 5.39. During the same time period, its PEG ratio has been as high as 1.57, as low as 0.12, with a median of 0.35.

China Petroleum & Chemical also has a P/B ratio of 0.43 compared to its industry's price-to-book ratio of 1.04. Over the past year, its P/B ratio has been as high as 0.48, as low as 0.36, with a median of 0.42.

Value investors will likely look at more than just these metrics, but the above data helps show that Petroleo Brasileiro and China Petroleum & Chemical are likely undervalued currently. And when considering the strength of its earnings outlook, PBR and SNP sticks out as one of the market's strongest value stocks.


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Petroleo Brasileiro S.A. Petrobras (PBR) : Free Stock Analysis Report
 
China Petroleum & Chemical Corporation (SNP) : Free Stock Analysis Report
 
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Zacks Investment Research

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