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Are Investors Undervaluing WPX Energy (WPX) Right Now?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company value investors might notice is WPX Energy (WPX). WPX is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 18.68, which compares to its industry's average of 19.68. Over the past year, WPX's Forward P/E has been as high as 42.31 and as low as 15.08, with a median of 20.67.

Investors should also note that WPX holds a PEG ratio of 0.67. 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. WPX's PEG compares to its industry's average PEG of 1.67. WPX's PEG has been as high as 1.40 and as low as 0.42, with a median of 0.62, all within the past year.

Another valuation metric that we should highlight is WPX's P/B ratio of 1.25. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.89. Over the past year, WPX's P/B has been as high as 1.51 and as low as 0.83, with a median of 1.09.

Finally, our model also underscores that WPX has a P/CF ratio of 3.39. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 5.44. Over the past year, WPX's P/CF has been as high as 5.93 and as low as 2.32, with a median of 3.34.

Value investors will likely look at more than just these metrics, but the above data helps show that WPX Energy is likely undervalued currently. And when considering the strength of its earnings outlook, WPX sticks out at as one of the market's strongest value stocks.


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