Are Investors Undervaluing Shell Oil (RDS.A) 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. Neverthe...
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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is Shell Oil (RDS.A). RDS.A is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.21, while its industry has an average P/E of 8.83. Over the past year, RDS.A's Forward P/E has been as high as 15.91 and as low as 7.05, with a median of 10.59.
Another notable valuation metric for RDS.A is its P/B ratio of 0.90. 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. This stock's P/B looks attractive against its industry's average P/B of 0.94. Over the past 12 months, RDS.A's P/B has been as high as 1.09 and as low as 0.56, with a median of 0.91.
Finally, investors should note that RDS.A has a P/CF ratio of 4.17. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. RDS.A's current P/CF looks attractive when compared to its industry's average P/CF of 6.06. Over the past year, RDS.A's P/CF has been as high as 5.61 and as low as 2.50, with a median of 4.30.
These are just a handful of the figures considered in Shell Oil'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 RDS.A is an impressive value stock right now.
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