Should Value Investors Buy BP (BP) Stock?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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 BP (BP). BP is currently holding a Zacks Rank #1 (Strong Buy) and a Value grade of A.

Another notable valuation metric for BP 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. BP's current P/B looks attractive when compared to its industry's average P/B of 2.20. Within the past 52 weeks, BP's P/B has been as high as 1.22 and as low as 0.90, with a median of 1.07.

Value investors also use the P/S ratio. The P/S ratio is calculated as price divided by sales. This is a preferred metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BP has a P/S ratio of 0.6. This compares to its industry's average P/S of 1.04.

Finally, investors should note that BP has a P/CF ratio of 5.13. 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 8.01. BP's P/CF has been as high as 5.93 and as low as 3.57, with a median of 4.92, all within the past year.

Investors could also keep in mind OMV (OMVKY), another Oil and Gas - Integrated - International stock with a Zacks Rank of #1 (Strong Buy) and Value grade of A.

Shares of OMV currently hold a Forward P/E ratio of 7.99, and its PEG ratio is 1.41. In comparison, its industry sports average P/E and PEG ratios of 10.38 and 0.91.

Over the past year, OMVKY's P/E has been as high as 8.69, as low as 5.63, with a median of 7.59; its PEG ratio has been as high as 1.53, as low as 0.75, with a median of 1.20 during the same time period.

Additionally, OMV has a P/B ratio of 0.67 while its industry's price-to-book ratio sits at 2.20. For OMVKY, this valuation metric has been as high as 0.73, as low as 0.47, with a median of 0.65 over the past year.

These are just a handful of the figures considered in BP and OMV'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 BP and OMVKY is an impressive value stock right now.

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This article originally published on Zacks Investment Research (zacks.com).

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