Are Investors Undervaluing Sunoco LP (SUN) 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 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 Sunoco LP (SUN). SUN is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 8.08. This compares to its industry's average Forward P/E of 10.79. Over the last 12 months, SUN's Forward P/E has been as high as 11.95 and as low as 3.76, with a median of 8.54.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SUN has a P/S ratio of 0.25. This compares to its industry's average P/S of 0.37.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Sunoco LP is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SUN feels like a great value stock at the moment.
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