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Is Earthstone Energy (ESTE) Stock Undervalued 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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of 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.

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 Earthstone Energy (ESTE). ESTE is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 4.85, while its industry has an average P/E of 13.31. Over the past year, ESTE's Forward P/E has been as high as 10.91 and as low as 3.75, with a median of 8.29.

Finally, investors should note that ESTE has a P/CF ratio of 1.90. 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. ESTE's P/CF compares to its industry's average P/CF of 4.99. Over the past year, ESTE's P/CF has been as high as 5.91 and as low as 1.43, with a median of 2.86.

These are just a handful of the figures considered in Earthstone Energy'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 ESTE is an impressive value stock right now.


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