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Should Value Investors Buy Summit Midstream Partners, LP (SMLP) Stock?

Zacks Equity Research
Cabot (COG) possesses the right combination of the two key ingredients for a likely earnings beat in its upcoming report. Get prepared with the key expectations.

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.

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 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.

Summit Midstream Partners, LP (SMLP) is a stock many investors are watching right now. SMLP is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 12.85, while its industry has an average P/E of 13.47. Over the past year, SMLP's Forward P/E has been as high as 40.10 and as low as -58.16, with a median of 18.61.

Another valuation metric that we should highlight is SMLP's P/B ratio of 1.02. The P/B ratio pits a stock's market value against 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 1.66. Over the past 12 months, SMLP's P/B has been as high as 1.38 and as low as 0.79, with a median of 1.13.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. SMLP has a P/S ratio of 1.54. This compares to its industry's average P/S of 1.67.

These are just a handful of the figures considered in Summit Midstream Partners, LP'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 SMLP is an impressive value stock right now.


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