Should Value Investors Buy Range Resources (RRC) 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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is Range Resources (RRC). RRC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 12.72 right now. For comparison, its industry sports an average P/E of 13.81. Over the past 52 weeks, RRC's Forward P/E has been as high as 21.88 and as low as 7.92, with a median of 15.18.
Investors will also notice that RRC has a PEG ratio of 0.54. 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. RRC's PEG compares to its industry's average PEG of 0.87. Over the past 52 weeks, RRC's PEG has been as high as 1.45 and as low as 0.49, with a median of 0.98.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. RRC has a P/S ratio of 0.73. This compares to its industry's average P/S of 1.45.
These are only a few of the key metrics included in Range 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, RRC 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.