Are Investors Undervaluing Devon Energy (DVN) Right Now?
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.
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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Devon Energy (DVN) is a stock many investors are watching right now. DVN is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. DVN has a P/S ratio of 1.1. This compares to its industry's average P/S of 1.49.
Finally, we should also recognize that DVN has a P/CF ratio of 3.05. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. DVN's current P/CF looks attractive when compared to its industry's average P/CF of 5.06. Within the past 12 months, DVN's P/CF has been as high as 12.28 and as low as 2.18, with a median of 5.53.
These are just a handful of the figures considered in Devon Energy'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 DVN is an impressive value stock right now.
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