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Is Ecopetrol (EC) a Great Value Stock Right Now?

Zacks Equity Research

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.

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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is Ecopetrol (EC). EC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

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Investors should also note that EC holds a PEG ratio of 0.71. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. EC's PEG compares to its industry's average PEG of 0.79. EC's PEG has been as high as 0.73 and as low as 0.41, with a median of 0.53, all within the past year.

Finally, our model also underscores that EC has a P/CF ratio of 2.62. 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. EC's P/CF compares to its industry's average P/CF of 6. Within the past 12 months, EC's P/CF has been as high as 2.91 and as low as 2.02, with a median of 2.36.

Value investors will likely look at more than just these metrics, but the above data helps show that Ecopetrol is likely undervalued currently. And when considering the strength of its earnings outlook, EC sticks out at as one of the market's strongest value stocks.


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