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Should Value Investors Buy PBF Energy (PBF) Stock?

·4-min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

PBF Energy (PBF) is a stock many investors are watching right now. PBF is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 3.33, while its industry has an average P/E of 5.65. Over the last 12 months, PBF's Forward P/E has been as high as 48.60 and as low as -103.69, with a median of 7.05.

Another notable valuation metric for PBF is its P/B ratio of 1.09. 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 attractive against its industry's average P/B of 1.92. PBF's P/B has been as high as 2.09 and as low as 0.40, with a median of 0.85, over the past year.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PBF has a P/S ratio of 0.11. This compares to its industry's average P/S of 0.31.

Finally, investors should note that PBF has a P/CF ratio of 2.25. 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. This stock's P/CF looks attractive against its industry's average P/CF of 4.72. PBF's P/CF has been as high as 7.13 and as low as -12, with a median of 4.07, all within the past year.

Investors could also keep in mind Valero Energy (VLO), an Oil and Gas - Refining and Marketing stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Valero Energy is trading at a forward earnings multiple of 5.63 at the moment, with a PEG ratio of 0.94. This compares to its industry's average P/E of 5.65 and average PEG ratio of 0.21.

Over the last 12 months, VLO's P/E has been as high as 57.89, as low as 4.97, with a median of 12.04, and its PEG ratio has been as high as 12.91, as low as 0.83, with a median of 2.08.

Additionally, Valero Energy has a P/B ratio of 1.96 while its industry's price-to-book ratio sits at 1.92. For VLO, this valuation metric has been as high as 2.90, as low as 1.32, with a median of 1.78 over the past year.

These are only a few of the key metrics included in PBF Energy and Valero Energy strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, PBF and VLO look like an impressive value stock at the moment.


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