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Are Investors Undervaluing Callon Petroleum (CPE) Right Now?

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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, 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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

Callon Petroleum (CPE) is a stock many investors are watching right now. CPE is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 3.33 right now. For comparison, its industry sports an average P/E of 6.94. Over the past 52 weeks, CPE's Forward P/E has been as high as 7.67 and as low as 2.52, with a median of 3.98.

We should also highlight that CPE has a P/B ratio of 1.85. 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 company's current P/B looks solid when compared to its industry's average P/B of 4.24. Over the past year, CPE's P/B has been as high as 3.88 and as low as 1.41, with a median of 2.06.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. CPE has a P/S ratio of 1.45. This compares to its industry's average P/S of 2.69.

Finally, investors will want to recognize that CPE has a P/CF ratio of 4.03. 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 14.05. Within the past 12 months, CPE's P/CF has been as high as 5.08 and as low as -40.27, with a median of -1.33.

Another great Oil and Gas - Exploration and Production - United States stock you could consider is SilverBow Resources (SBOW), which is a # 1 (Strong Buy) stock with a Value Score of A.

SilverBow Resources sports a P/B ratio of 3.04 as well; this compares to its industry's price-to-book ratio of 4.24. In the past 52 weeks, SBOW's P/B has been as high as 5.26, as low as 1.13, with a median of 2.50.

Value investors will likely look at more than just these metrics, but the above data helps show that Callon Petroleum and SilverBow Resources are likely undervalued currently. And when considering the strength of its earnings outlook, CPE and SBOW sticks out as one of the market's strongest value stocks.


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