Is Earthstone Energy (ESTE) Stock Undervalued Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One company value investors might notice is

Earthstone Energy (ESTE)

. ESTE is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with P/E ratio of 3.48 right now. For comparison, its industry sports an average P/E of 5.54. Over the last 12 months, ESTE’s Forward P/E has been as high as 20.03 and as low as 2.89, with a median of 4.73.

Another notable valuation metric for ESTE is its P/B ratio of 1.48. 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. ESTE’s current P/B looks attractive when compared to its industry’s average P/B of 3.49. Over the past 12 months, ESTE’s P/B has been as high as 2 and as low as 0.66, with a median of 1.03.

Finally, investors should note that ESTE has a P/CF ratio of 8.23. This metric takes into account a company’s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. ESTE’s P/CF compares to its industry’s average P/CF of 11.50. 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 6.25.

Investors could also keep in mind

PDC Energy (PDCE)

, an Oil and Gas – Exploration and Production – United States stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Additionally, PDC Energy has a P/B ratio of 2.28 while its industry’s price-to-book ratio sits at 3.49. For PDCE, this valuation metric has been as high as 2.97, as low as 1.44, with a median of 1.96 over the past year.

These are just a handful of the figures considered in Earthstone Energy and PDC Energy’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 ESTE and PDCE is an impressive value stock right now.

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