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Should Value Investors Buy Murphy Oil (MUR) Stock?

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

Murphy Oil (MUR) is a stock many investors are watching right now. MUR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is MUR's P/B ratio of 0.88. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. MUR's current P/B looks attractive when compared to its industry's average P/B of 1.99. Within the past 52 weeks, MUR's P/B has been as high as 1.30 and as low as 0.78, with a median of 1.11.

Finally, we should also recognize that MUR has a P/CF ratio of 3.65. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 5.71. Over the past 52 weeks, MUR's P/CF has been as high as 7.51 and as low as 2.86, with a median of 5.26.

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


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