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Are Investors Undervaluing DCP Midstream Partners, LP (DCP) 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.

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.

On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.

One stock to keep an eye on is DCP Midstream Partners, LP (DCP). DCP is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 12.64. This compares to its industry's average Forward P/E of 14.15. DCP's Forward P/E has been as high as 1,709.59 and as low as -11,836.73, with a median of 10.48, all within the past year.

Investors should also recognize that DCP has a P/B ratio of 1.05. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. DCP's current P/B looks attractive when compared to its industry's average P/B of 1.09. DCP's P/B has been as high as 1.06 and as low as 0.09, with a median of 0.52, over the past year.

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


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