Based on key financial metrics such as the price-to-sales ratio, shareholder yield and the price-earnings ratio, the following 3 stocks made the list for top value stocks in the Oil & Gas - Integrated 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 - Integrated 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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3 Undervalued Oil & Gas - Integrated Stocks

Of course, there are countless value stocks that are worth mentioning, but this is a concise list of the top 3 undervalued stocks in the Oil & Gas - Integrated industry for Friday, August 09, 2024. Let’s take a closer look at their individual scores to see how they measure up against each other and the Oil & Gas - Integrated 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.

Eni SpA (ADR)’s Value Grade

Value Grade:

Eni SpA (Eni) is an Italy-based company engaged in the exploration, development and production of hydrocarbons, in the supply and marketing of gas, liquefied natural gas (LNG) and power, in the refining and marketing of petroleum products, in the production and marketing of basic petrochemicals, plastics and elastomers and in commodity trading. The Company's segments include Exploration & Production, Gas & Power, and Refining & Marketing. Its Exploration & Production segment engages in oil and natural gas exploration and field development and production, as well as LNG operations in over 40 countries, including Italy, Libya, Egypt, Norway, the United Kingdom, Angola, Congo, Nigeria, the United States, Kazakhstan, Algeria, Australia, Venezuela, Iraq, Ghana and Mozambique. Its Gas & Power segment engages in supply, trading and marketing of gas, LNG and electricity, international gas transport activities and commodity trading and derivatives.

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.

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

When you look at Eni SpA (ADR)’s price-to-sales ratio at 0.50 compared to the industry median at 0.94, this company has a lower price relative to revenue compared to its peers. This could make Eni SpA (ADR)’s stock more attractive for value investors.

Eni SpA (ADR)’s price-earnings ratio is 11.85 compared to the industry median at 10.56. This means it has a higher share price relative to earnings compared to its peers. This could make Eni SpA (ADR) less attractive for value investors.

Now, let’s assess Eni SpA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 3.7, when compared to the industry median of 5.6, 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. Eni SpA (ADR)’s shareholder yield is higher than its industry median ratio of 8.16%. 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. Eni SpA (ADR)’s price-to-book ratio is lower than its industry median ratio of 1.55. This could make Eni SpA (ADR) more attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Eni SpA (ADR)’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Eni SpA (ADR)’s price-to-free-cash-flow ratio is higher than its industry median ratio of 9.93. This could make Eni SpA (ADR) less attractive because the higher P/FCF ratio indicates that Eni SpA (ADR) 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.

Equinor ASA (ADR)’s Value Grade

Value Grade:

Equinor ASA, formerly Statoil ASA is a Norway-based international energy company. The Company’s purpose is to turn natural resources into energy. Equinor sells crude oil and delivers natural gas to the European market. It is also engaged in processing, refining, offshore wind and carbon capture and storage activities. Equinor ASA has five reporting segments: Exploration & Production Norway (E&P; Norway), Exploration & Production International (E&P; International), Exploration & Production USA (E&P; USA), Marketing, Midstream & Processing (MMP) and Renewables (REN). The Company has several subsidiaries such as Equinor Nigeria Energy Company Ltd, Equinor Wind Power AS, Equinor International Netherlands BV and Equinor Brasil Energia Ltda.

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.

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

Equinor ASA (ADR)’s price-earnings ratio is 8.3 compared to the industry median at 10.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Equinor ASA (ADR) more attractive for value investors.

Equinor ASA (ADR)’s price-to-book ratio is lower than its peers. This could make Equinor ASA (ADR) more attractive for value investors when compared to the industry median at 1.55.

You can read more about Equinor ASA (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.

Petroleo Brasileiro SA Petrobras (ADR)’s Value Grade

Value Grade:

Petroleo Brasileiro S.A.-Petrobras specializes in the oil, natural gas and energy industry. The Company is engaged in prospecting, drilling, refining, processing, trading and transporting crude oil from producing onshore and offshore oil fields and from shale or other rocks. Its segments include Exploration and Production, which covers the activities of exploration, development and production of crude oil, natural gas liquid and natural gas; Refining, Transportation and Marketing, which covers the refining, logistics, transport and trading of crude oil and oil products activities, exporting of ethanol, and extraction and processing of shale; Gas and Power, which is engaged in transportation and trading of natural gas produced in Brazil and imported natural gas; Biofuels, which covers the activities of production of biodiesel and its co-products, and ethanol-related activities; Distribution, which includes the activities of its subsidiary Petrobras Distribuidora S.A., and Corporate.

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.

Petroleo Brasileiro SA Petrobras (ADR) has a Value Score of 96, which is considered to be undervalued.

Petroleo Brasileiro SA Petrobras (ADR)’s price-earnings ratio is 4.7 compared to the industry median at 10.6. This means that it has a lower price relative to its earnings compared to its peers. This makes Petroleo Brasileiro SA Petrobras (ADR) more attractive for value investors.

Petroleo Brasileiro SA Petrobras (ADR)’s price-to-book ratio is higher than its peers. This could make Petroleo Brasileiro SA Petrobras (ADR) less attractive for value investors when compared to the industry median at 1.55.

You can read more about Petroleo Brasileiro SA Petrobras (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.

Other Oil & Gas - Integrated 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 - Integrated stocks as well as other industrys.

Choosing Which of the 3 Best Oil & Gas - Integrated 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.

• Eni SpA (ADR) stock has a Value Grade of A.
• Equinor ASA (ADR) stock has a Value Grade of A.
• Petroleo Brasileiro SA Petrobras (ADR) stock has a Value Grade of A.

Now that you have a bit more background about each of the 3 undervalued stocks in the Oil & Gas - Integrated 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 - Integrated Stocks

Want to learn more about Oil & Gas - Integrated 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.

• 3 Undervalued Oil & Gas - Integrated Stocks for Friday, August 09
• Why Transportadora de Gas del Sur SA (ADR)’s (TGS) Stock Is Up 5.19%
• What You Need to Know About Western Midstream Partners LP's Q2 Earnings
• Why Suncor Energy Inc (USA)’s (SU) Stock Is Up 4.54%

AAII Disclaimer

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