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Should Value Investors Buy Diamondback Energy (FANG) Stock?

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 company to watch right now is Diamondback Energy (FANG). FANG is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 4.49, which compares to its industry's average of 4.78. Over the past year, FANG's Forward P/E has been as high as 10.90 and as low as 4.22, with a median of 6.28.

Another notable valuation metric for FANG is its P/B ratio of 1.39. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. FANG's current P/B looks attractive when compared to its industry's average P/B of 2.93. FANG's P/B has been as high as 2.06 and as low as 1.28, with a median of 1.63, over the past year.

Finally, investors will want to recognize that FANG has a P/CF ratio of 3.96. 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. FANG's P/CF compares to its industry's average P/CF of 6.94. Within the past 12 months, FANG's P/CF has been as high as 12.67 and as low as -114.24, with a median of 6.51.

Investors could also keep in mind Permian Resources Corporation (PR), an Oil and Gas - Exploration and Production - United States stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.

Permian Resources Corporation also has a P/B ratio of 0.61 compared to its industry's price-to-book ratio of 2.93. Over the past year, its P/B ratio has been as high as 0.98, as low as 0.51, with a median of 0.77.

These are just a handful of the figures considered in Diamondback Energy and Permian Resources Corporation'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 FANG and PR is an impressive value stock right now.


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Diamondback Energy, Inc. (FANG): Free Stock Analysis Report
 
Permian Resources Corporation (PR): Free Stock Analysis Report
 
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