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Should Value Investors Buy Ecopetrol (EC) Stock?

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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.

Ecopetrol (EC) is a stock many investors are watching right now. EC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A.

We also note that EC holds a PEG ratio of 0.11. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. EC's PEG compares to its industry's average PEG of 0.25. Over the past 52 weeks, EC's PEG has been as high as 0.21 and as low as 0.11, with a median of 0.15.

Investors should also recognize that EC has a P/B ratio of 1.22. 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 attractive against its industry's average P/B of 1.25. Over the past year, EC's P/B has been as high as 1.75 and as low as 0.93, with a median of 1.36.

Investors could also keep in mind Petroleo Brasileiro (PBR), an Oil and Gas - Integrated - Emerging Markets stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.

Petroleo Brasileiro is currently trading with a Forward P/E ratio of 3.91 while its PEG ratio sits at 0.11. Both of the company's metrics compare favorably to its industry's average P/E of 2.87 and average PEG ratio of 0.25.

PBR's price-to-earnings ratio has been as high as 8.69 and as low as 3.27, with a median of 4.33, while its PEG ratio has been as high as 0.34 and as low as 0.10, with a median of 0.19, all within the past year.

Furthermore, Petroleo Brasileiro holds a P/B ratio of 1.27 and its industry's price-to-book ratio is 1.25. PBR's P/B has been as high as 1.49, as low as 0.86, with a median of 1.04 over the past 12 months.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Ecopetrol and Petroleo Brasileiro are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, EC and PBR feels like a great value stock at the moment.


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Ecopetrol S.A. (EC) : Free Stock Analysis Report
 
Petroleo Brasileiro S.A. Petrobras (PBR) : Free Stock Analysis Report
 
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