Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 6 stocks made the list for top value stocks in the Oil & Gas - Exploration and Production industry. Those looking for value stocks to add to their portfolio may want to use this list as a starting point for further investment research.

Why Focus on Undervalued Oil & Gas - Exploration and Production Stocks?

Value investors seek to buy stocks at a discount to their intrinsic value. Long-term returns show that such strategies are advantageous. Value stocks, as a group, tend to outperform growth stocks over extended periods of time. Typically, value investors perform financial analysis of numerous metrics, don’t follow the herd and are long-term investors.

AAII’s A+ Investor Value Grade is derived from a stock’s Value Score. The Value Score is the percentile rank of the average of the percentile ranks of the price-to-sales ratio, price-earnings ratio, enterprise-value-to-EBITDA (EV/EBITDA) ratio, shareholder yield, price-to-book-value ratio and price-to-free-cash-flow ratio. The score is variable, meaning it can consider all six ratios or, should any of the six ratios not be valid, the remaining ratios that are valid. To be assigned a Value Score, stocks must have a valid (non-null) ratio and corresponding ranking for at least two of the six valuation ratios.

What Goes Into AAII’s Value Grade?

Stock evaluation requires access to huge amounts of data as well as the knowledge and time to sift through it all, make sense of financial ratios, read income statements and analyze recent stock movement. AAII created A+ Investor, a robust data suite that condenses data research in an actionable and customizable way suitable for investors of all knowledge levels, to help investors with that task.

AAII’s proprietary stock grades come with A+ Investor. These offer intuitive A–F grades for more than just value. It is possible for a stock to appear cheap based on one valuation metric but appear expensive on another. It is also possible for one valuation ratio to be associated with outperforming stocks during certain periods of time but not others. Some stocks may even have null values for certain metrics like the price-earnings ratio or the price-to-book ratio but not others. An example of this would be a company with losses instead of profits or a negative book value because of heavy borrowing. Negative earnings or book value result in non-meaningful ratios that are left blank or null.

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6 Undervalued Oil & Gas - Exploration and Production Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 6 undervalued stocks in the Oil & Gas - Exploration and Production industry for Wednesday, March 13, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil & Gas - Exploration and Production industry median.

The Value Grade is assigned based on how each stock’s composite valuation compares to all other stocks.

The process for assigning grades starts with each variable for a given stock. The percentile rankings for all valid ratios that a stock has are calculated. So, for instance, a stock could have a price-to-book ranking in the 43rd percentile, a price-earnings ranking in the 67th percentile, a price-to-sales ranking in the 23rd percentile, etc. Then, those rankings are averaged for each stock. (A minimum of two valid variables are required, though all six will be used if available.)

Once the average of the individual variables is calculated, that average is ranked against all stocks. Put another way, each stock’s composite valuation is compared to all other stocks. These ranks are then sorted into quintiles from the cheapest 20% (a grade of A) to the most expensive 20% (a grade of F).

As always, we recommend that you conduct proper due diligence and research before investing in any security. We also suggest that investors utilize numerous grades, not just value, when it comes to deciding whether a company is a good fit for their allocation needs.

Chesapeake Energy Corp’s Value Grade

Value Grade:

Chesapeake Energy Corporation (Chesapeake) is a natural gas and oil exploration and production company. The Company is engaged in the acquisition, exploration, and development of properties to produce oil, natural gas, and natural gas liquids (NGLs) from underground reservoirs. It owns a diverse portfolio of onshore United States unconventional natural gas and liquids assets, including interests in approximately 5,000 gross oil and natural gas wells. Its natural gas resource plays are Marcellus Shale in the northern Appalachian Basin in Pennsylvania (Marcellus) and the Haynesville/Bossier Shales in northwestern Louisiana (Haynesville). The Company’s marketing operations include oil, natural gas and NGL marketing services, that consists of commodity price structuring, negotiating of gathering, hauling, processing and transportation services, and contract administration and nomination services for Chesapeake and other interest owners in Chesapeake-operated wells.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Chesapeake Energy Corp has a Value Score of 76, which is considered to be undervalued.

When you look at Chesapeake Energy Corp’s price-to-sales ratio at 1.41 compared to the industry median at 2.08, this company has a lower price relative to revenue compared to its peers. This could make Chesapeake Energy Corp’s stock more attractive for value investors.

Chesapeake Energy Corp’s price-earnings ratio is 4.97 compared to the industry median at 8.24. This means it has a lower share price relative to earnings compared to its peers. This could make Chesapeake Energy Corp more attractive for value investors.

Now, let’s assess Chesapeake Energy Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 3.0, when compared to the industry median of 4.5, the company may be considered undervalued in relation to its peers. Value investors could use the enterprise multiple to identify stocks that are considered overvalued or undervalued relative to their industry.

Shareholder yield is the sum of a stock’s dividend yield (paid over previous 12 months minus special dividends) and the percentage of net share buybacks over the previous 12 months. Chesapeake Energy Corp’s shareholder yield is higher than its industry median ratio of 2.12%. Value investors may look for an attractive shareholder yield because it can be a powerful tool for identifying if the company has a good management team.

As one of the most common value metrics, the price-to-book ratio evaluates a company’s current market price relative to its book value. Chesapeake Energy Corp’s price-to-book ratio is lower than its industry median ratio of 1.30. This could make Chesapeake Energy Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Chesapeake Energy Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Chesapeake Energy Corp’s price-to-free-cash-flow ratio is higher than its industry median ratio of 8.31. This could make Chesapeake Energy Corp less attractive because the higher P/FCF ratio indicates that Chesapeake Energy Corp is undervalued. The P/FCF ratio metric can also be viewed over a long-term time frame to see if the company's cash flow to share price value is generally improving or worsening.

Devon Energy Corp’s Value Grade

Value Grade:

Devon Energy Corporation is an oil and gas producer in the United States with a multi-basin portfolio. The Company is primarily engaged in the exploration, development and production of oil, natural gas and natural gas liquids (NGLs). Its oil and gas properties include Delaware Basin, Eagle Ford, Anadarko Basin, Williston Basin and Powder River Basin. The Delaware Basin operates in southeast New Mexico and across the state line into west Texas. It offers exploration and development opportunities from many geologic reservoirs and play types, including the oil-rich Wolfcamp, Bone Spring, Avalon and Delaware formations. The Eagle Ford operations are located in Texas' DeWitt and Karnes counties. The Anadarko Basin has around four-operated rig program associated with a joint venture. Its position in the Williston is located entirely on the Fort Berthold Indian Reservation in North Dakota. The Powder River Basin is focused on emerging oil opportunities in Wyoming's Powder River Basin.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Devon Energy Corp has a Value Score of 84, which is considered to be undervalued.

Devon Energy Corp’s price-earnings ratio is 8.0 compared to the industry median at 8.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Devon Energy Corp more attractive for value investors.

Devon Energy Corp’s price-to-book ratio is lower than its peers. This could make Devon Energy Corp more attractive for value investors when compared to the industry median at 1.30.

You can read more about Devon Energy Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Enerplus Corp’s Value Grade

Value Grade:

Enerplus Corporation is a Canada-based independent oil and gas exploration and production company. The Company is focused on the development of North American oil and natural gas assets. Its portfolio includes light oil assets in the Bakken, North Dakota, and a position in the Marcellus natural gas shale region in northeast Pennsylvania. The Company's operations are concentrated in the core of the Bakken/Three Forks light oil shale play where it holds approximately 235,600 net acres in North Dakota. The acreage is primarily located across the Fort Berthold Indian Reservation, as well as in Williams and Dunn Counties. It holds an interest in approximately 32,500 net acres in the dry gas window of the Marcellus shale in northeast Pennsylvania. This non-operated position is located in Susquehanna, Bradford, Wyoming, Sullivan and Lycoming counties.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Enerplus Corp has a Value Score of 83, which is considered to be undervalued.

Enerplus Corp’s price-earnings ratio is 8.6 compared to the industry median at 8.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Enerplus Corp less attractive for value investors.

Enerplus Corp’s price-to-book ratio is lower than its peers. This could make Enerplus Corp more attractive for value investors when compared to the industry median at 1.30.

You can read more about Enerplus Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Gulf Coast Ultra Deep Royalty Trust’s Value Grade

Value Grade:

Gulf Coast Ultra Deep Royalty Trust (the Royalty Trust) is a statutory trust. The Company holds overriding royalty interest in future production from each of McMoRan's Inboard Lower Tertiary/Cretaceous exploration prospects located in the shallow waters of the Gulf of Mexico and onshore in South Louisiana. The Royalty Trust's reserve fund short-term investments include United States treasury securities. The Company's subject interests consist of approximately 20 specified Inboard Lower Tertiary/Cretaceous. The offshore subject interests consisted of exploration prospects, including Barataria, Barbosa, Blackbeard East, Blackbeard West, Blackbeard West, Bonnet, Calico Jack, Captain Blood, Davy Jones, Davy Jones West, Drake, England, Hook, Hurricane, Lafitte, Morgan, and Queen Anne's Revenge. The Company?s onshore subject interests consisted of Highlander, Lineham Creek, and Tortuga.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Gulf Coast Ultra Deep Royalty Trust has a Value Score of 71, which is considered to be undervalued.

Gulf Coast Ultra Deep Royalty Trust’s price-earnings ratio is 3.4 compared to the industry median at 8.2. This means that it has a lower price relative to its earnings compared to its peers. This makes Gulf Coast Ultra Deep Royalty Trust more attractive for value investors.

Gulf Coast Ultra Deep Royalty Trust’s price-to-book ratio is lower than its peers. This could make Gulf Coast Ultra Deep Royalty Trust more attractive for value investors when compared to the industry median at 1.30.

You can read more about Gulf Coast Ultra Deep Royalty Trust’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Mexco Energy Corp’s Value Grade

Value Grade:

Mexco Energy Corporation, through its subsidiaries, are engaged in the acquisition, exploration, development and production of crude oil, natural gas, condensate and natural gas liquids (NGLs). The Company owns producing properties and undeveloped acreage in approximately 14 states. It acquires interests in producing and non-producing oil and gas leases from landowners and leaseholders in areas considered favorable for oil and gas exploration, development, and production. There are two primary areas in which the Company is focused, namely the Delaware Basin located in the Western portion of the Permian Basin including Lea and Eddy Counties, New Mexico and Reeves and Loving Counties, Texas and the Midland Basin located in the Eastern portion of the Permian Basin, including Reagan, Upton, Midland, Martin, Howard and Glasscock Counties, Texas. The Company's subsidiaries include Forman Energy Corporation, Southwest Texas Disposal Corporation, and TBO Oil & Gas, LLC.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

Mexco Energy Corp has a Value Score of 81, which is considered to be undervalued.

Mexco Energy Corp’s price-earnings ratio is 10.7 compared to the industry median at 8.2. This means that it has a higher price relative to its earnings compared to its peers. This makes Mexco Energy Corp less attractive for value investors.

Mexco Energy Corp’s price-to-book ratio is higher than its peers. This could make Mexco Energy Corp less attractive for value investors when compared to the industry median at 1.30.

You can read more about Mexco Energy Corp’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

San Juan Basin Royalty Trust’s Value Grade

Value Grade:

San Juan Basin Royalty Trust (the Trust) is an express trust. The principal asset of the Trust is the Royalty, which consists of a 75% net overriding royalty interest that burdens the Subject Interests located in the San Juan Basin. PNC Bank acts as the trustee of the Trust. The primary function of the Trustee is to collect the Royalty Income, to pay all expenses and charges of the Trust and to distribute the remaining available income to the Unit Holders. The Trust is a widely held fixed investment trust (WHFIT) classified as a non-mortgage widely held fixed investment trust (NMWHFIT). The Trust?s reserves consisted of natural gas reserves, and proceeds from the subject interests, which were attributable to the production and sale of natural gas by Hilcorp, as well as other proceeds.

Stocks with a Value Score from 81 to 100 are considered deep value, those with a score between 61 and 80 are value and so on.

San Juan Basin Royalty Trust has a Value Score of 67, which is considered to be undervalued.

San Juan Basin Royalty Trust’s price-earnings ratio is 3.5 compared to the industry median at 8.2. This means that it has a lower price relative to its earnings compared to its peers. This makes San Juan Basin Royalty Trust more attractive for value investors.

San Juan Basin Royalty Trust’s price-to-book ratio is lower than its peers. This could make San Juan Basin Royalty Trust more attractive for value investors when compared to the industry median at 1.30.

You can read more about San Juan Basin Royalty Trust’s key financial metrics like shareholder yield, price-to-free-cash-flow and EV/EBITDA ratio, or learn more about its Momentum and Growth Grades, by subscribing to A+ Investor.

Other Oil & Gas - Exploration and Production Stock Grades

Value is just one of the five Stock Grades included in our A+ Investor service. AAII members can see the top-graded stocks—those with grades of A or B for value, growth, momentum, earnings estimate revisions and quality—on the A+ Stock Grades Screener.

Also, if you want full access to all of AAII’s premium services, you can subscribe to one convenient bundled plan called AAII Platinum where you can try out A+ Investor, AAII Dividend Investing, the Stock Superstars Report, Growth Investing and VMQ Stocks. With the other premium services, you can dive deep into additional metrics, portfolios, commentary and information about Oil & Gas - Exploration and Production stocks as well as other industrys.

Choosing Which of the 6 Best Oil & Gas - Exploration and Production Stocks Is Right for You

Choosing which value stocks to invest in will ultimately depend on your individual goals and allocation; however, comparing similar value stocks in the same industry can help you analyze which might be better investments for you in the long run. So, let’s take a look at the Value Grade for all of our stocks.

• Chesapeake Energy Corp stock has a Value Grade of B.
• Devon Energy Corp stock has a Value Grade of A.
• Enerplus Corp stock has a Value Grade of A.
• Gulf Coast Ultra Deep Royalty Trust stock has a Value Grade of B.
• Mexco Energy Corp stock has a Value Grade of A.
• San Juan Basin Royalty Trust stock has a Value Grade of B.

Now that you have a bit more background about each of the 6 undervalued stocks in the Oil & Gas - Exploration and Production industry as well as their overall grades, it’s time for you to conduct additional research to see if these could fit your portfolio needs based on your goals and risk tolerance. AAII can help you figure out both and identify which investments align with what works best for you.

We do so through a program of education that teaches you to invest for yourself and become an effective manager of your own wealth—no more relying on others for your financial independence. You can rely on AAII for timeless articles on financial planning and stock-picking, unbiased research and actionable analysis that makes you a better investor.

A+ Investor adds to that qualitative teaching by giving you a powerful data suite that helps you whittle down investment decisions to find stocks, exchange-traded funds (ETFs) or mutual funds that meet your needs.

Additional Resources About Oil & Gas - Exploration and Production Stocks

Want to learn more about Oil & Gas - Exploration and Production stocks to see if they could be the right investment for you? Check out some additional resources and articles to help you on your financial journey.

• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Wednesday, March 13
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, March 12
• Why Vista Energy SAB de CV - ADR’s (VIST) Stock Is Up 5.12%
• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, March 11

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