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, July 17, 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 is an independent exploration and production company. The Company is engaged in the acquisition, exploration, and development of properties to produce natural gas, oil and natural gas liquids (NGLs) from underground reservoirs. It owns a large portfolio of onshore United States (U.S.) unconventional natural gas assets, including interests in approximately 5,000 natural gas wells. The Company's natural gas resource plays are Marcellus Shale in the northern Appalachian Basin in Pennsylvania (Marcellus) and the Haynesville/Bossier Shales in northwestern Louisiana (Haynesville).

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 87, which is considered to be undervalued.

When you look at Chesapeake Energy Corp’s price-to-sales ratio at 1.87 compared to the industry median at 2.33, 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 11.16 compared to the industry median at 11.62. 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 5.5, when compared to the industry median of 5.3, 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. Chesapeake Energy Corp’s shareholder yield is higher than its industry median ratio of 2.08%. 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 1.45. This could make Chesapeake Energy Corp more attractive to investors looking for a new addition to their portfolio.

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.

CNX Resources Corp’s price-earnings ratio is 4.4 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes CNX Resources Corp more attractive for value investors.

CNX Resources Corp’s price-to-book ratio is higher than its peers. This could make CNX Resources Corp less attractive for value investors when compared to the industry median at 1.45.

You can read more about CNX 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.

California Resources Corp’s Value Grade

Value Grade:

California Resources Corporation is an independent energy and carbon management company committed to energy transition. It produces the lowest carbon intensity oil in the United States. It is in the early stages of developing several carbon capture and storage projects in California. Its carbon management business, Carbon TerraVault, is focused on building, installing, operating, and maintaining carbon dioxide (CO2) capture equipment, transportation assets and storage facilities in California. It has operations in oil and gas basins, including San Joaquin Basin, Los Angeles Basin, Sacramento Basin, and other. It holds substantially all the working, surface and mineral interests in the Elk Hills field, which is its largest producing asset in the San Joaquin basin, and has a large ownership interest in several other oil fields located in the San Joaquin basin, including Buena Vista and Coles Levee. The Los Angeles Basin is a northwest-trending plain about 50 miles long and 20 miles wide.

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.

California Resources Corp has a Value Score of 67, which is considered to be undervalued.

California Resources Corp’s price-earnings ratio is 15.2 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes California Resources Corp less attractive for value investors.

California Resources Corp’s price-to-book ratio is lower than its peers. This could make California Resources Corp more attractive for value investors when compared to the industry median at 1.45.

You can read more about California 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.

Crescent Energy Co’s Value Grade

Value Grade:

Crescent Energy Company is an energy company with a portfolio of assets concentrated in Texas and the Rockies. It is engaged in the exploration and production of crude oil, natural gas and NGLs. The Company’s portfolio includes low-decline oil and natural gas assets in proven regions across the United States, including in the Eagle Ford and Rockies. In addition to this geographic diversity, its portfolio of leasehold acreage is enhanced and complemented by additional interests in mineral acreage and midstream infrastructure. In addition to its leasehold acreage, the Company owns mineral and royalty interests. The Company owned mineral interests in 175 thousand gross acres and an overriding royalty interest in 126 thousand gross acres, both operated by large, well-capitalized oil and natural gas companies primarily in the Eagle Ford, Marcellus, Utica, and Rockies. It also owns and operates a variety of midstream assets, which provide services to its upstream assets and other customers.

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

Crescent Energy Co’s price-earnings ratio is 545.1 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Crescent Energy Co less attractive for value investors.

Crescent Energy Co’s price-to-book ratio is higher than its peers. This could make Crescent Energy Co less attractive for value investors when compared to the industry median at 1.45.

You can read more about Crescent Energy 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.

Chevron Corp’s Value Grade

Value Grade:

Chevron Corporation is an integrated energy company. The Company produces crude oil and natural gas; manufactures transportation fuels, lubricants, petrochemicals and additives; and develops technologies that enhance its business and the industry. The Company’s upstream operations consist primarily of exploring for, developing, producing and transporting crude oil and natural gas; liquefaction, transportation and regasification associated with liquefied natural gas (LNG); transporting crude oil by major international oil export pipelines; processing, transporting, storage and marketing of natural gas; carbon capture and storage; and a gas-to-liquids plant. The Company’s downstream operations consist primarily of refining of crude oil into petroleum products; marketing of crude oil, refined products, and lubricants; manufacturing and marketing of renewable fuels; transporting of crude oil and refined products by pipeline, marine vessel, motor equipment and rail car; 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.

Chevron Corp has a Value Score of 62, which is considered to be undervalued.

Chevron Corp’s price-earnings ratio is 14.5 compared to the industry median at 11.6. This means that it has a higher price relative to its earnings compared to its peers. This makes Chevron Corp less attractive for value investors.

Chevron Corp’s price-to-book ratio is lower than its peers. This could make Chevron Corp more attractive for value investors when compared to the industry median at 1.45.

You can read more about Chevron 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.

Vital Energy Inc’s Value Grade

Value Grade:

Vital Energy, Inc. is an independent energy company. The Company is focused on the acquisition, exploration and development of oil and natural gas properties in the Permian Basin of West Texas. The Company operates through a single segment, exploration and production. It has assembled 265,306 largely contiguous net acres in the Permian Basin, most of which is prospective for multi-zone development in Glasscock, Howard, Midland, Reagan, and Upton counties in the Midland Basin and Pecos, Reeves, and Ward counties in the Delaware Basin. The Company has purchased certain oil and gas properties in the Delaware Basin, including approximately 21,450 net acres located in Reeves County, 15,500 net acres located in Reeves County, and 24,000 net acres in Pecos, Reeves and Ward Counties. It has also purchased certain oil and natural gas properties in the Midland Basin, including approximately 11,200 net acres located in Upton and Reagan 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.

Vital Energy Inc has a Value Score of 90, which is considered to be undervalued.

Vital Energy Inc’s price-earnings ratio is 1.9 compared to the industry median at 11.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Vital Energy Inc more attractive for value investors.

Vital Energy Inc’s price-to-book ratio is higher than its peers. This could make Vital Energy Inc less attractive for value investors when compared to the industry median at 1.45.

You can read more about Vital 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.

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 A.
• CNX Resources Corp stock has a Value Grade of A.
• California Resources Corp stock has a Value Grade of B.
• Crescent Energy Co stock has a Value Grade of B.
• Chevron Corp stock has a Value Grade of B.
• Vital Energy Inc 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 Wednesday, July 17
• 4 Undervalued Oil & Gas - Exploration and Production Stocks for Tuesday, July 16
• Why LandBridge Co LLC’s (LB) Stock Is Down 6.90%
• 6 Undervalued Oil & Gas - Exploration and Production Stocks for Monday, July 15

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