Is Cenovus Energy (CVE) Stock Undervalued Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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.

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.

Cenovus Energy (CVE) is a stock many investors are watching right now. CVE is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value.

We should also highlight that CVE has a P/B ratio of 1.44. 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 2.12. Over the past 12 months, CVE's P/B has been as high as 1.57 and as low as 0.93, with a median of 1.27.

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. CVE has a P/S ratio of 1.31. This compares to its industry's average P/S of 1.45.

Finally, we should also recognize that CVE has a P/CF ratio of 5.63. 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 7.12. Within the past 12 months, CVE's P/CF has been as high as 5.82 and as low as 3.46, with a median of 4.49.

These are only a few of the key metrics included in Cenovus Energy'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, CVE looks like an impressive value stock at the moment.

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

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