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 Tuesday, May 14, 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.

CNX Resources Corp’s Value Grade

Value Grade:

CNX Resources Corporation is an independent low carbon intensity natural gas development, production, midstream and technology company centered in the Appalachian Basin. The majority of its operations are centered on unconventional shale formations, primarily the Marcellus Shale and Utica Shale, in Pennsylvania, Ohio and West Virginia. Additionally, it operates and develops Coalbed Methane (CBM) properties in Virginia. It has rights to extract natural gas from Shale formations in Pennsylvania, West Virginia, and Ohio from approximately 527,000 net Marcellus Shale acres and approximately 607,000 net Utica Shale acres. The Company holds approximately 53,000 acres of incremental Upper Devonian acres. It has rights to extract CBM in Virginia from approximately 278,000 net CBM acres. It extracts CBM natural gas primarily from the Pocahontas #3 seam. It has rights to extract natural gas from other Shale and shallow oil and gas formations, primarily in Illinois, Indiana, New York, and others.

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.

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

When you look at CNX Resources Corp’s price-to-sales ratio at 2.94 compared to the industry median at 2.26, this company has a higher price relative to revenue compared to its peers. This could make CNX Resources Corp’s stock less attractive for value investors.

CNX Resources Corp’s price-earnings ratio is 3.91 compared to the industry median at 10.67. This means it has a lower share price relative to earnings compared to its peers. This could make CNX Resources Corp more attractive for value investors.

Now, let’s assess CNX Resources Corp’s EV/EBITDA ratio, also known as enterprise multiple. At 9.5, when compared to the industry median of 5.2, 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. CNX Resources Corp’s shareholder yield is higher than its industry median ratio of 2.74%. 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. CNX Resources Corp’s price-to-book ratio is lower than its industry median ratio of 1.33. This could make CNX Resources Corp more attractive to investors looking for a new addition to their portfolio.

Coterra Energy Inc’s Value Grade

Value Grade:

Coterra Energy Inc. is an independent oil and gas company. The Company is engaged in the development, exploration and production of oil, natural gas and natural gas liquids (NGLs). Its operations are primarily concentrated in three core operating areas: the Permian Basin in west Texas and southeast New Mexico, the Marcellus Shale in northeast Pennsylvania and the Anadarko Basin in the Mid-Continent region in Oklahoma. Its Permian Basin properties hold approximately 296,000 net acres in its core operating area in the Delaware Basin. Its Marcellus Shale properties hold approximately 186,000 net acres in the dry gas window of the Marcellus Shale. The Anadarko Basin properties hold approximately 182,000 net acres and its development activities are primarily focused on both the Woodford Shale and the Meramec formations. It sells oil, natural gas and NGLs to industrial customers, local distribution companies, oil and gas marketers, pipeline companies and power generation facilities.

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.

Coterra Energy Inc has a Value Score of 67, which is considered to be undervalued.

Coterra Energy Inc’s price-earnings ratio is 16.3 compared to the industry median at 10.7. This means that it has a higher price relative to its earnings compared to its peers. This makes Coterra Energy Inc less attractive for value investors.

Coterra Energy Inc’s price-to-book ratio is lower than its peers. This could make Coterra Energy Inc more attractive for value investors when compared to the industry median at 1.33.

You can read more about Coterra 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.

Primeenergy Resources Corp’s Value Grade

Value Grade:

PrimeEnergy Resources Corporation is an independent oil and natural gas company engaged in acquiring, developing, and producing oil and natural gas. The Company owns leasehold, mineral and royalty interests in producing and non-producing oil and gas properties across the United States, primarily in Oklahoma, and Texas. Through its subsidiaries Prime Operating Company, Eastern Oil Well Service Company, and EOWS Midland Company, it acts as operator and provides well-servicing support operations for many of the onshore oil and gas wells it operates, as well as for third parties. It operates approximately 534 active wells and owns non-operating interests and royalties in approximately 952 additional wells. It maintains an acreage position of approximately 16,407 gross (9,341 net) acres in the Permian Basin in West Texas, primarily in Reagan, Upton, Martin and Midland counties. It has over 511 producing wells in the Mid-Continent area, of which 128 wells are operated by the 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.

Primeenergy Resources Corp has a Value Score of 90, which is considered to be undervalued.

Primeenergy Resources Corp’s price-earnings ratio is 9.6 compared to the industry median at 10.7. This means that it has a lower price relative to its earnings compared to its peers. This makes Primeenergy Resources Corp more attractive for value investors.

Primeenergy Resources Corp’s price-to-book ratio is higher than its peers. This could make Primeenergy Resources Corp less attractive for value investors when compared to the industry median at 1.33.

You can read more about Primeenergy Resources 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.

Reserve Petroleum Co’s Value Grade

Value Grade:

The Reserve Petroleum Company is an independent oil and gas company. The Company is engaged in oil and natural gas exploration, development, and minerals management with areas of concentration in Arkansas, Kansas, Oklahoma, South Dakota, Texas, and Wyoming. The Company’s principal properties are oil and natural gas properties. It has interests in approximately 879 producing properties with 76% of them being working interest properties and the remaining 24% being royalty interest properties. It owns non-producing mineral interests of 88,214 net acres out of 256,534 gross acres. These mineral interests are in twelve different states in the north and south-central United States. A total of 81,080 (92%) net acres are in the states of Arkansas, Kansas, Oklahoma, South Dakota, Texas and Wyoming, the areas of concentration for the Company in its exploration and development programs. Its subsidiaries include Grand Woods Development, LLC and Trinity Water 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.

Reserve Petroleum Co has a Value Score of 87, which is considered to be undervalued.

Reserve Petroleum Co’s price-to-book ratio is higher than its peers. This could make Reserve Petroleum Co less attractive for value investors when compared to the industry median at 1.33.

You can read more about Reserve Petroleum Co’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.

• CNX Resources Corp stock has a Value Grade of A.
• Coterra Energy Inc stock has a Value Grade of B.
• Primeenergy Resources Corp stock has a Value Grade of A.
• Reserve Petroleum Co 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 Tuesday, May 14
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, May 13
• Why Permian Basin Royalty Trust’s (PBT) Stock Is Up 5.39%
• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Friday, May 10

AAII Disclaimer

We make no representations or warranties that any investor will, or is likely to, achieve profits similar to those shown, because past, hypothetical or simulated performance is not necessarily indicative of future results. Before making an investment decision, you should consider your circumstances and whether the information on our content is applicable to your situation. This information was prepared in good faith and we accept no liability for any errors or omissions. The full disclaimer can be read here.