Are Investors Undervaluing Newfield Exploration (NFX) 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.
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.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One company value investors might notice is Newfield Exploration (NFX). NFX is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 5.10, while its industry has an average P/E of 11.21. Over the last 12 months, NFX's Forward P/E has been as high as 15.79 and as low as 4.42, with a median of 8.08.
Investors should also note that NFX holds a PEG ratio of 0.43. 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. NFX's industry currently sports an average PEG of 0.76. Over the last 12 months, NFX's PEG has been as high as 1.39 and as low as 0.36, with a median of 0.64.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. NFX has a P/S ratio of 1.77. This compares to its industry's average P/S of 2.11.
Finally, our model also underscores that NFX has a P/CF ratio of 4.05. 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. NFX's current P/CF looks attractive when compared to its industry's average P/CF of 6.38. Over the past year, NFX's P/CF has been as high as 8.33 and as low as 3.50, with a median of 6.38.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Newfield Exploration is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, NFX feels like a great value stock at the moment.
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