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Are Investors Undervaluing WPX Energy (WPX) Right Now?

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.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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.

One company to watch right now is WPX Energy (WPX). WPX is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 15.65. This compares to its industry's average Forward P/E of 19.55. Over the past year, WPX's Forward P/E has been as high as 42.31 and as low as 15.08, with a median of 20.19.

WPX is also sporting a PEG ratio of 0.56. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. WPX's PEG compares to its industry's average PEG of 1.66. WPX's PEG has been as high as 1.40 and as low as 0.42, with a median of 0.62, all within the past year.

Another notable valuation metric for WPX is its P/B ratio of 1.12. The P/B is a method of comparing a stock's market value to 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 1.89. Over the past 12 months, WPX's P/B has been as high as 1.51 and as low as 0.83, with a median of 1.09.

Finally, our model also underscores that WPX has a P/CF ratio of 3.04. 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. This stock's P/CF looks attractive against its industry's average P/CF of 5.44. Over the past 52 weeks, WPX's P/CF has been as high as 5.93 and as low as 2.32, with a median of 3.24.

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


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