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Should Value Investors Buy These Oils-Energy Stocks?

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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.

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.

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 stock to keep an eye on is OMV (OMVJF). OMVJF is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 5.78, which compares to its industry's average of 8.96. Over the last 12 months, OMVJF's Forward P/E has been as high as 10.29 and as low as 5.07, with a median of 7.02.

Another valuation metric that we should highlight is OMVJF's P/B ratio of 0.77. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.22. Within the past 52 weeks, OMVJF's P/B has been as high as 0.81 and as low as 0.63, with a median of 0.71.

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. OMVJF has a P/S ratio of 0.61. This compares to its industry's average P/S of 0.86.

Finally, our model also underscores that OMVJF has a P/CF ratio of 2.84. 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 7.86. Within the past 12 months, OMVJF's P/CF has been as high as 3.37 and as low as 2.46, with a median of 2.75.

Investors could also keep in mind PetroChina (PTR), an Oil and Gas - Integrated - International stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.

PetroChina is currently trading with a Forward P/E ratio of 6.49 while its PEG ratio sits at 0.13. Both of the company's metrics compare favorably to its industry's average P/E of 8.96 and average PEG ratio of 0.64.

PTR's Forward P/E has been as high as 22.38 and as low as 5.58, with a median of 7.52. During the same time period, its PEG ratio has been as high as 0.23, as low as 0.11, with a median of 0.14.

Furthermore, PetroChina holds a P/B ratio of 0.44 and its industry's price-to-book ratio is 1.22. PTR's P/B has been as high as 0.46, as low as 0.28, with a median of 0.37 over the past 12 months.

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


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
OMV AG (OMVJF) : Free Stock Analysis Report
 
PetroChina Company Limited (PTR) : Free Stock Analysis Report
 
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