Is APA (APA) Stock Undervalued Right Now?

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.

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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.

APA (APA) is a stock many investors are watching right now. APA is currently sporting a Zacks Rank #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 8.22. This compares to its industry's average Forward P/E of 11.35. Over the past 52 weeks, APA's Forward P/E has been as high as 8.88 and as low as 4.09, with a median of 6.45.

Another valuation metric that we should highlight is APA's P/B ratio of 1.23. 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 attractive against its industry's average P/B of 3.33. Over the past 12 months, APA's P/B has been as high as 1.63 and as low as 0.79, with a median of 1.20.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. APA has a P/S ratio of 1.47. This compares to its industry's average P/S of 2.2.

Another great Oil and Gas - Exploration and Production - United States stock you could consider is Devon Energy (DVN), which is a Zacks Rank of #2 (Buy) stock with a Value Score of A.

Shares of Devon Energy are currently trading at a forward earnings multiple of 8.15 and a PEG ratio of 1.91 compared to its industry's P/E and PEG ratios of 11.35 and 0.89, respectively.

DVN's Forward P/E has been as high as 8.86 and as low as 5.57, with a median of 7.66. During the same time period, its PEG ratio has been as high as 3.24, as low as 0.51, with a median of 1.18.

Furthermore, Devon Energy holds a P/B ratio of 1.41 and its industry's price-to-book ratio is 3.33. DVN's P/B has been as high as 2.02, as low as 1.16, with a median of 1.50 over the past 12 months.

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

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

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