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 Thursday, April 04, 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.

Battalion Oil Corp’s Value Grade

Value Grade:

Battalion Oil Corporation is an independent energy company. The Company is engaged in the acquisition, production, exploration and development of onshore oil and natural gas properties in the United States. The Company’s principal properties consist of leasehold interests in developed and undeveloped oil and natural gas properties and the reserves associated with these properties. The Company owns interests in developed and undeveloped oil and natural gas acreage in Texas locations. The Company’s working interests in approximately 40,375 net acres in the Delaware Basin in Pecos, Reeves, Ward and Winkler Counties, Texas. The Company has approximately 103 operated wells producing in this area in addition to minor working interests in 13 non-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.

Battalion Oil Corp has a Value Score of 86, which is considered to be undervalued.

When you look at Battalion Oil Corp’s price-to-sales ratio at 0.40 compared to the industry median at 2.20, this company has a lower price relative to revenue compared to its peers. This could make Battalion Oil Corp’s stock more attractive for value investors.

Now, let’s assess Battalion Oil Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 4.5, when compared to the industry median of 4.5, the company may be considered overvalued 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. Battalion Oil Corp’s shareholder yield is lower than its industry median ratio of 2.40%. 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. Battalion Oil Corp’s price-to-book ratio is lower than its industry median ratio of 1.53. This could make Battalion Oil Corp more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Battalion Oil Corp’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Battalion Oil Corp’s price-to-free-cash-flow ratio is lower than its industry median ratio of 8.37. This could make Battalion Oil Corp more attractive because the lower P/FCF ratio indicates that Battalion Oil 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.

Barnwell Industries Inc’s Value Grade

Value Grade:

Barnwell Industries, Inc. is engaged in three businesses: acquiring, developing, producing and selling oil and natural gas in Canada and Oklahoma; investing in land interests in Hawaii; and drilling wells and installing and repairing water pumping systems in Hawaii. The Company operates through three segments: Oil and Natural Gas, Land Investment, and Contract Drilling. Oil and Natural Gas Segment is engaged in oil and natural gas development, production, acquisitions and sales in Canada and Oklahoma. It invests in oil and natural gas properties, which are located in Alberta, Canada and Oklahoma. Land Investment segment is entitled to receive contingent residual payments from the entities that previously purchased the Company?s land investment interests under contracts entered into in prior years. Contract Drilling segment provides well drilling services and water pumping system installation and repairs in Hawaii.

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.

Barnwell Industries Inc has a Value Score of 65, which is considered to be undervalued.

Barnwell Industries Inc’s price-to-book ratio is higher than its peers. This could make Barnwell Industries Inc less attractive for value investors when compared to the industry median at 1.53.

You can read more about Barnwell Industries Inc’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.

Baytex Energy Corp’s Value Grade

Value Grade:

Baytex Energy Corp. is a Canada-based energy company. The Company is engaged in the acquisition, development and production of crude oil and natural gas in the Western Canadian Sedimentary Basin and in the Eagle Ford in the United States. Its crude oil and natural gas operations are organized into three main operating areas: Light Oil USA (Eagle Ford), Light Oil Canada (Pembina Duvernay / Viking) and Heavy Oil Canada (Peace River / Peavine / Lloydminster). Its Eagle Ford assets are located in the core of the liquids-rich Eagle Ford shale in South Texas. The Eagle Ford shale covers approximately 162,000 net acres of crude oil operations. Its Viking assets are located in the Dodsland area in southwest Saskatchewan and in the Esther area of southeastern Alberta. It also holds 100% working interest land position in the East Duvernay resource play in central Alberta.

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.

Baytex Energy Corp has a Value Score of 77, which is considered to be undervalued.

Baytex Energy Corp’s price-to-book ratio is higher than its peers. This could make Baytex Energy Corp less attractive for value investors when compared to the industry median at 1.53.

You can read more about Baytex 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.

Crescent Point Energy Corp’s Value Grade

Value Grade:

Crescent Point Energy Corp. is a Canada-based oil and gas exploration company. The Company is engaged in the business of acquiring, developing and holding interests in petroleum and natural gas properties and assets. Its crude oil and natural gas properties and related assets are located in the provinces of Saskatchewan, Alberta and the United States. Its operating areas include Viewfield area of southeastern Saskatchewan; Shaunavon resource play, which is located in southwest Saskatchewan; Flat Lake play, which is a multi-zone resource play located in southeast Saskatchewan; Kaybob Duvernay play, which is situated in the heart of the condensate rich fairway, Central Alberta, and Montney assets in Alberta. Its wholly owned subsidiaries include Crescent Point Resources Partnership, Crescent Point Holdings Ltd. and Crescent Point U.S. Holdings Corp.

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.

Crescent Point Energy Corp has a Value Score of 96, which is considered to be undervalued.

Crescent Point Energy Corp’s price-earnings ratio is 6.0 compared to the industry median at 9.1. This means that it has a lower price relative to its earnings compared to its peers. This makes Crescent Point Energy Corp more attractive for value investors.

Crescent Point Energy Corp’s price-to-book ratio is higher than its peers. This could make Crescent Point Energy Corp less attractive for value investors when compared to the industry median at 1.53.

You can read more about Crescent Point 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.

VAALCO Energy, Inc.’s Value Grade

Value Grade:

VAALCO Energy, Inc. is an independent energy company principally engaged in the acquisition, exploration, development and production of crude oil, natural gas and natural gas liquids. The Company’s segments include segments Gabon and Equatorial Guinea. It holds 58.8% participating interest in the Etame Marin block, located offshore Gabon in West Africa. The Etame Marin block covers an area of approximately 46,200 gross acres located 20 miles offshore in water depths of approximately 250 feet. The operations of all segments include exploration for and production of hydrocarbons where commercial reserves have been found and developed. The Company owns an interest in an undeveloped block offshore Equatorial Guinea, West Africa. The Company conducts its operating activities in Egypt, Canada, and offshore Gabon. In Egypt, its interests are spread across two regions: the Eastern Desert, which contains the West Gharib, West Bakr and Northwest Gharib merged concessions, and the Western Desert.

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.

VAALCO Energy, Inc. has a Value Score of 76, which is considered to be undervalued.

VAALCO Energy, Inc.’s price-earnings ratio is 13.2 compared to the industry median at 9.1. This means that it has a higher price relative to its earnings compared to its peers. This makes VAALCO Energy, Inc. less attractive for value investors.

VAALCO Energy, Inc.’s price-to-book ratio is lower than its peers. This could make VAALCO Energy, Inc. more attractive for value investors when compared to the industry median at 1.53.

You can read more about VAALCO Energy, Inc.’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.

US Energy Corp’s Value Grade

Value Grade:

U.S. Energy Corp. is an independent energy company. The Company is focused on the acquisition and development of oil and gas producing properties primarily in the United States. The Company’s principal properties and operations are in the Rockies region (Montana, Wyoming and North Dakota), the Mid-Continent region (Oklahoma, Kansas, and North and East Texas), and the West Texas, South Texas, and Gulf Coast regions.

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.

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

US Energy Corp’s price-to-book ratio is higher than its peers. This could make US Energy Corp less attractive for value investors when compared to the industry median at 1.53.

You can read more about US 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.

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.

• Battalion Oil Corp stock has a Value Grade of A.
• Barnwell Industries Inc stock has a Value Grade of B.
• Baytex Energy Corp stock has a Value Grade of B.
• Crescent Point Energy Corp stock has a Value Grade of A.
• VAALCO Energy, Inc. stock has a Value Grade of B.
• US Energy Corp stock has a Value Grade of A.

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 Thursday, April 04
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Wednesday, April 03
• 5 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, April 02
• Why Amplify Energy Corp’s (AMPY) Stock Is Up 4.98%

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