Are Investors Undervaluing LyondellBasell (LYB) Right Now?
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.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. 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.
One stock to keep an eye on is LyondellBasell (LYB). LYB is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 10.97, while its industry has an average P/E of 21.70. LYB's Forward P/E has been as high as 12.97 and as low as 3.76, with a median of 10.77, all within the past year.
Investors should also note that LYB holds a PEG ratio of 1.37. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. LYB's industry has an average PEG of 3.35 right now. Over the past 52 weeks, LYB's PEG has been as high as 1.91 and as low as 0.55, with a median of 1.52.
Finally, investors will want to recognize that LYB has a P/CF ratio of 10.71. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. LYB's current P/CF looks attractive when compared to its industry's average P/CF of 11.73. Within the past 12 months, LYB's P/CF has been as high as 11.74 and as low as 2.47, with a median of 6.69.
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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