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Should Value Investors Buy Exterran (EXTN) Stock?

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Zacks Equity Research
·3 min read
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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.

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 company value investors might notice is Exterran (EXTN). EXTN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Another notable valuation metric for EXTN is its P/B ratio of 0.39. The P/B is a method of comparing a stock's market value to 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 0.68. Over the past year, EXTN's P/B has been as high as 0.92 and as low as 0.31, with a median of 0.48.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. EXTN has a P/S ratio of 0.14. This compares to its industry's average P/S of 0.19.

Finally, our model also underscores that EXTN has a P/CF ratio of 8.17. 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 10.45. Within the past 12 months, EXTN's P/CF has been as high as 12.01 and as low as 1.23, with a median of 3.90.

These are just a handful of the figures considered in Exterran'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 EXTN is an impressive value stock right now.


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Zacks Investment Research