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Are Investors Undervaluing LyondellBasell (LYB) Right Now?

Zacks Equity Research

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.

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 LyondellBasell (LYB). LYB is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.63. This compares to its industry's average Forward P/E of 10.90. Over the last 12 months, LYB's Forward P/E has been as high as 10.07 and as low as 6.63, with a median of 8.02.

LYB is also sporting a PEG ratio of 0.74. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LYB's PEG compares to its industry's average PEG of 1.13. Over the last 12 months, LYB's PEG has been as high as 1.06 and as low as 0.74, with a median of 0.88.

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. LYB has a P/S ratio of 0.69. This compares to its industry's average P/S of 0.79.

These figures are just a handful of the metrics value investors tend to look at, but they help show that LyondellBasell is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, LYB feels like a great value stock at the moment.


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