Are Investors Undervaluing Earthstone Energy (ESTE) Right Now?

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.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.


Earthstone Energy (ESTE)

is a stock many investors are watching right now. ESTE 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 2.40, which compares to its industry’s average of 5.06. ESTE’s Forward P/E has been as high as 9.97 and as low as 2.16, with a median of 4.58, all within the past year.

Another notable valuation metric for ESTE is its P/B ratio of 1.13. Investors use the P/B ratio to look at a stock’s market value versus 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 3.19. Within the past 52 weeks, ESTE’s P/B has been as high as 2 and as low as 0.66, with a median of 1.04.

Finally, investors should note that ESTE has a P/CF ratio of 6.28. This data point considers a firm’s operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 10.54. Over the past 52 weeks, ESTE’s P/CF has been as high as 11.06 and as low as 4.24, with a median of 6.16.

Another great Oil and Gas – Exploration and Production – United States stock you could consider is

SilverBow Resources (SBOW)

, which is a # 2 (Buy) stock with a Value Score of A.

SilverBow Resources also has a P/B ratio of 3.04 compared to its industry’s price-to-book ratio of 3.19. Over the past year, its P/B ratio has been as high as 5.26, as low as 1.13, with a median of 2.52.

These are only a few of the key metrics included in Earthstone Energy and SilverBow Resources strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, ESTE and SBOW look like an impressive value stock at the moment.


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