Should Value Investors Buy Sunoco LP (SUN) Stock?
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...
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 stock to keep an eye on is Sunoco LP (SUN). SUN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.12. This compares to its industry's average Forward P/E of 12.51. Over the last 12 months, SUN's Forward P/E has been as high as 9.73 and as low as 7.12, with a median of 8.16.
Finally, investors will want to recognize that SUN has a P/CF ratio of 4.51. 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 8.05. Within the past 12 months, SUN's P/CF has been as high as 6.79 and as low as 3.88, with a median of 5.03.
Value investors will likely look at more than just these metrics, but the above data helps show that Sunoco LP is likely undervalued currently. And when considering the strength of its earnings outlook, SUN sticks out at as one of the market's strongest value stocks.
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