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Is Golar LNG Partners LP (GMLP) 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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Golar LNG Partners LP (GMLP) is a stock many investors are watching right now. GMLP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 9.31 right now. For comparison, its industry sports an average P/E of 15.16. Over the last 12 months, GMLP's Forward P/E has been as high as 18.37 and as low as 9.31, with a median of 13.12.

GMLP is also sporting a PEG ratio of 1.16. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. GMLP's PEG compares to its industry's average PEG of 2.41. Over the last 12 months, GMLP's PEG has been as high as 2.16 and as low as 1.16, with a median of 1.61.

Another notable valuation metric for GMLP is its P/B ratio of 1.09. 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 solid versus its industry's average P/B of 1.24. Over the past 12 months, GMLP's P/B has been as high as 2.30 and as low as 1.09, with a median of 1.65.

Finally, investors should note that GMLP has a P/CF ratio of 3.17. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 5.44. Over the past year, GMLP's P/CF has been as high as 6.75 and as low as 3.17, with a median of 5.16.

These are just a handful of the figures considered in Golar LNG Partners LP'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 GMLP is an impressive value stock right now.


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