Should Value Investors Buy Denbury Resources (DNR) 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 the latest value, growth, and momentum trends to underscore strong picks.
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 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.
One stock to keep an eye on is Denbury Resources (DNR). DNR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Investors should also recognize that DNR has a P/B ratio of 0.66. The P/B is a method of comparing a stock's market value to 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 1.89. DNR's P/B has been as high as 3.16 and as low as 0.64, with a median of 1.14, over the past year.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's 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. DNR has a P/S ratio of 0.52. This compares to its industry's average P/S of 1.1.
Finally, our model also underscores that DNR has a P/CF ratio of 1.51. 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. DNR's P/CF compares to its industry's average P/CF of 5.34. Over the past 52 weeks, DNR's P/CF has been as high as 6.96 and as low as 1.35, with a median of 2.37.
These are only a few of the key metrics included in Denbury Resources'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, DNR looks like an impressive value stock at the moment.
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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.