Is BP (BP) Stock Undervalued Right Now?

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.

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

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is BP (BP). BP is currently sporting a Zacks Rank #1 (Strong Buy), as well as a Value grade of A.

Another valuation metric that we should highlight is BP's P/B ratio of 1.13. 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 2.10. Over the past year, BP's P/B has been as high as 1.22 and as low as 0.90, with a median of 1.07.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BP has a P/S ratio of 0.58. This compares to its industry's average P/S of 0.99.

Finally, our model also underscores that BP has a P/CF ratio of 5.13. 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. This stock's P/CF looks attractive against its industry's average P/CF of 8.81. Over the past 52 weeks, BP's P/CF has been as high as 5.93 and as low as 3.57, with a median of 4.92.

These are only a few of the key metrics included in BP's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BP looks like an impressive value stock at the moment.

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This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research

Source Zacks-com