Yahoo Finance Should Value Investors Buy DCP Midstream Partners (DCP) Stock?
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, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
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.
One company to watch right now is DCP Midstream Partners (DCP). DCP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 8.52, which compares to its industry's average of 14.65. DCP's Forward P/E has been as high as 10.13 and as low as 6.94, with a median of 8.52, all within the past year.
Another valuation metric that we should highlight is DCP's P/B ratio of 1.56. 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. DCP's current P/B looks attractive when compared to its industry's average P/B of 1.75. Over the past year, DCP's P/B has been as high as 1.61 and as low as 1.09, with a median of 1.41.
Finally, we should also recognize that DCP has a P/CF ratio of 5.97. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DCP's P/CF compares to its industry's average P/CF of 8.99. Within the past 12 months, DCP's P/CF has been as high as 10.54 and as low as 4.93, with a median of 6.65.
Investors could also keep in mind Ultrapar Participacoes (UGP), an Oil and Gas - Production and Pipelines stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of Ultrapar Participacoes are currently trading at a forward earnings multiple of 9.33 and a PEG ratio of 0.41 compared to its industry's P/E and PEG ratios of 14.65 and 1.97, respectively.
Over the last 12 months, UGP's P/E has been as high as 18.06, as low as 9.06, with a median of 11.09, and its PEG ratio has been as high as 0.81, as low as 0.40, with a median of 0.49.
Ultrapar Participacoes sports a P/B ratio of 1.56 as well; this compares to its industry's price-to-book ratio of 1.75. In the past 52 weeks, UGP's P/B has been as high as 2.16, as low as 1.27, with a median of 1.57.
These are just a handful of the figures considered in DCP Midstream Partners and Ultrapar Participacoes'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 DCP and UGP is an impressive value stock right now.
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DCP Midstream Partners, LP (DCP) : Free Stock Analysis Report
Ultrapar Participacoes S.A. (UGP) : Free Stock Analysis Report
