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Should Value Investors Buy KLX Energy Services (KLXE) Stock?

·2 min read

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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 to watch right now is KLX Energy Services (KLXE). KLXE is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is KLXE's P/B ratio of 0.64. 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. KLXE's current P/B looks attractive when compared to its industry's average P/B of 1.72. Over the past year, KLXE's P/B has been as high as 1.24 and as low as 0.04, with a median of 0.43.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. KLXE has a P/S ratio of 0.2. This compares to its industry's average P/S of 0.45.

These are only a few of the key metrics included in KLX Energy Services's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, KLXE looks like an impressive value stock at the moment.


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