Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 4 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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4 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 4 undervalued stocks in the Oil & Gas - Exploration and Production industry for Thursday, April 18, 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.

Berry Corporation (Bry)’s Value Grade

Value Grade:

Berry Corporation (bry) is an independent upstream energy company. The Company operates through two segments: exploration and production (E&P;) and well servicing and abandonment (CJWS). The E&P; segment consists of the development and production of onshore, low geologic risk, long-lived conventional oil and gas reserves, primarily located in California, as well as Utah. Its California operating area consists of properties located in Midway-Sunset, South Belridge, McKittrick and Poso Creek fields in the San Joaquin basin in Kern County. The Company operates Uinta basin operations in the Brundage Canyon, Ashley Forest, and Lake Canyon areas in Utah. The well servicing and abandonment segment provides wellsite services in California for oil and natural gas production companies, with a focus on well servicing, well abandonment services and water logistics. The Company’s subsidiaries include Berry Petroleum Company, LLC; CJ Berry Well Services Management, LLC; and C&J; Well Services, 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.

Berry Corporation (Bry) has a Value Score of 87, which is considered to be undervalued.

When you look at Berry Corporation (Bry)’s price-to-sales ratio at 0.70 compared to the industry median at 2.19, this company has a lower price relative to revenue compared to its peers. This could make Berry Corporation (Bry)’s stock more attractive for value investors.

Berry Corporation (Bry)’s price-earnings ratio is 19.96 compared to the industry median at 8.92. This means it has a higher share price relative to earnings compared to its peers. This could make Berry Corporation (Bry) less attractive for value investors.

Now, let’s assess Berry Corporation (Bry)’s EV/EBITDA ratio, also known as enterprise multiple. At 3.3, when compared to the industry median of 4.6, 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. Berry Corporation (Bry)’s shareholder yield is higher than its industry median ratio of 2.31%. 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. Berry Corporation (Bry)’s price-to-book ratio is lower than its industry median ratio of 1.44. This could make Berry Corporation (Bry) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Berry Corporation (Bry)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Berry Corporation (Bry)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 8.31. This could make Berry Corporation (Bry) less attractive because the higher P/FCF ratio indicates that Berry Corporation (Bry) 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.

Ecopetrol SA (ADR)’s Value Grade

Value Grade:

Ecopetrol S.A. is an oil company. The Company operates in Colombia, Peru, Brazil and the United States Gulf Coast. The Company's segments include Exploration and Production, Transportation and Logistics, and Refining, Petrochemicals and Biofuels. The Company's Exploration and Production segment includes exploration, development and production activities in Colombia and abroad. The Company's Transportation and Logistics segment includes the transportation of crude oil, motor fuels, fuel oil and other refined products, including diesel and biofuels. The Company's main crude oil pipeline systems' operating capacity is approximately 1.34 million barrels per day (BPD). The Company's main refineries are the Barrancabermeja refinery, which it directly owns and operates, and a refinery in the Free Trade Zone in Cartagena that is operated by Reficar S.A., a subsidiary of the Company. The Company also owns and operates two other minor refineries: Orito and Apiay.

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.

Ecopetrol SA (ADR) has a Value Score of 94, which is considered to be undervalued.

Ecopetrol SA (ADR)’s price-earnings ratio is 4.8 compared to the industry median at 8.9. This means that it has a lower price relative to its earnings compared to its peers. This makes Ecopetrol SA (ADR) more attractive for value investors.

Ecopetrol SA (ADR)’s price-to-book ratio is higher than its peers. This could make Ecopetrol SA (ADR) less attractive for value investors when compared to the industry median at 1.44.

You can read more about Ecopetrol SA (ADR)’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.

Diamondback Energy Inc’s Value Grade

Value Grade:

Diamondback Energy, Inc. is an independent oil and natural gas company focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. The Company's activities are primarily focused on horizontal development of the Spraberry and Wolfcamp formations of the Midland Basin and the Wolfcamp and Bone Spring formations of the Delaware Basin, both of which are part of the larger Permian Basin in West Texas and New Mexico. Its total acreage position in the Permian Basin includes approximately 607,877 gross (493,769 net) acres, which consists primarily of 428,324 gross (349,707 net) acres in the Midland Basin and 174,828 gross (143,742 net) acres in the Delaware Basin. The Company is also engaged in midstream gathering, compression, water handling, disposal and treatment operations. Its subsidiary Viper Energy, Inc., also owns mineral interests in the Permian 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.

Diamondback Energy Inc has a Value Score of 65, which is considered to be undervalued.

Diamondback Energy Inc’s price-earnings ratio is 11.6 compared to the industry median at 8.9. This means that it has a higher price relative to its earnings compared to its peers. This makes Diamondback Energy Inc less attractive for value investors.

Diamondback Energy Inc’s price-to-book ratio is lower than its peers. This could make Diamondback Energy Inc more attractive for value investors when compared to the industry median at 1.44.

You can read more about Diamondback 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.

TXO Partners LP’s Value Grade

Value Grade:

TXO Partners, L.P. is an oil and gas company. The Company is focused on the acquisition, development, optimization and exploitation of conventional oil, natural gas, and natural gas liquid reserves in North America. The Company’s acreage positions are concentrated in the Permian Basin of West Texas and New Mexico and the San Juan Basin of New Mexico and Colorado. The Company seeks to maintain low-risk development and exploitation of its existing properties, increasing its reserves and production. It owns 50% of Cross Timbers Energy, LLC (Cross Timbers Energy). Cross Timbers Energy’s properties are located primarily in the San Juan Basin of New Mexico and Colorado and the Permian Basin of West Texas and New Mexico. The Company also has a wholly owned subsidiary, MorningStar Operating LLC, which owns oil and gas assets primarily in the San Juan Basin of New Mexico and Colorado and the Permian Basin of West Texas and New Mexico. oil and gas company.

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.

TXO Partners LP has a Value Score of 91, which is considered to be undervalued.

TXO Partners LP’s price-earnings ratio is 7.7 compared to the industry median at 8.9. This means that it has a lower price relative to its earnings compared to its peers. This makes TXO Partners LP more attractive for value investors.

TXO Partners LP’s price-to-book ratio is higher than its peers. This could make TXO Partners LP less attractive for value investors when compared to the industry median at 1.44.

You can read more about TXO Partners LP’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 4 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.

• Berry Corporation (Bry) stock has a Value Grade of A.
• Ecopetrol SA (ADR) stock has a Value Grade of A.
• Diamondback Energy Inc stock has a Value Grade of B.
• TXO Partners LP stock has a Value Grade of A.

Now that you have a bit more background about each of the 4 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.

• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Thursday, April 18
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Wednesday, April 17
• Why Amplify Energy Corp’s (AMPY) Stock Is Down 4.35%
• Why San Juan Basin Royalty Trust’s (SJT) Stock Is Down 4.58%

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