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Is Laredo Petroleum (LPI) Stock Undervalued Right Now?

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

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.

Laredo Petroleum (LPI) is a stock many investors are watching right now. LPI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with P/E ratio of 4.18 right now. For comparison, its industry sports an average P/E of 12.49. Over the past year, LPI's Forward P/E has been as high as 21.40 and as low as 4.18, with a median of 8.21.

Investors will also notice that LPI has a PEG ratio of 0.84. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. LPI's PEG compares to its industry's average PEG of 0.84. Within the past year, LPI's PEG has been as high as 4.28 and as low as 0.84, with a median of 1.64.

Another notable valuation metric for LPI is its P/B ratio of 1.41. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 2.08. Within the past 52 weeks, LPI's P/B has been as high as 8.53 and as low as 1.41, with a median of 2.51.

Finally, investors will want to recognize that LPI has a P/CF ratio of 1.84. 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. LPI's current P/CF looks attractive when compared to its industry's average P/CF of 6.61. Over the past 52 weeks, LPI's P/CF has been as high as 10.76 and as low as 1.84, with a median of 3.01.

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

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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