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Should Value Investors Buy Golar LNG Partners LP (GMLP) Stock?

Zacks Equity Research

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 Golar LNG Partners LP (GMLP). GMLP is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 12.71, which compares to its industry's average of 18.98. Over the past 52 weeks, GMLP's Forward P/E has been as high as 17.30 and as low as 9.31, with a median of 12.33.

Investors will also notice that GMLP has a PEG ratio of 1.59. 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. GMLP's PEG compares to its industry's average PEG of 3.70. Over the last 12 months, GMLP's PEG has been as high as 2.16 and as low as 1.16, with a median of 1.54.

Finally, investors will want to recognize that GMLP has a P/CF ratio of 4.34. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.55. GMLP's P/CF has been as high as 6.32 and as low as 3.17, with a median of 4.73, all within the past year.

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


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