Is Plains All American Pipeline (PAA) a Great Value Stock 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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 to watch right now is Plains All American Pipeline (PAA). PAA is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 11.80 right now. For comparison, its industry sports an average P/E of 12.69. PAA's Forward P/E has been as high as 15.90 and as low as 9.36, with a median of 12.31, all within the past year.
PAA is also sporting a PEG ratio of 1.49. 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. PAA's industry currently sports an average PEG of 2.88. Within the past year, PAA's PEG has been as high as 2.04 and as low as 1.20, with a median of 1.63.
Another valuation metric that we should highlight is PAA's P/B ratio of 1.64. Investors use the P/B ratio to look at a stock's market value versus 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 1.90. Over the past year, PAA's P/B has been as high as 2.34 and as low as 1.50, with a median of 1.82.
Finally, our model also underscores that PAA has a P/CF ratio of 5.52. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 8.97. PAA's P/CF has been as high as 17.23 and as low as 5.40, with a median of 9.73, all within the past year.
These are just a handful of the figures considered in Plains All American Pipeline's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PAA is an impressive value stock right now.
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