Is Shell Oil (RDS.A) a Great Value Stock 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. Nevertheless, we are always paying attention to...
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
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 stock to keep an eye on is Shell Oil (RDS.A). RDS.A is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 7.49 right now. For comparison, its industry sports an average P/E of 8.85. Over the last 12 months, RDS.A's Forward P/E has been as high as 15.91 and as low as 7.05, with a median of 9.01.
Another notable valuation metric for RDS.A is its P/B ratio of 1.08. The P/B ratio is used to compare a stock's market value with 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 1.14. Over the past 12 months, RDS.A's P/B has been as high as 1.14 and as low as 0.56, with a median of 0.93.
Finally, our model also underscores that RDS.A has a P/CF ratio of 5.03. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 7.06. Over the past 52 weeks, RDS.A's P/CF has been as high as 5.61 and as low as 2.55, with a median of 4.40.
These are only a few of the key metrics included in Shell Oil's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, RDS.A looks like an impressive value stock at the moment.
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