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 Friday, September 27, 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.

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 87, which is considered to be undervalued.

When you look at Barnwell Industries Inc’s price-to-sales ratio at 0.93 compared to the industry median at 2.10, this company has a lower price relative to revenue compared to its peers. This could make Barnwell Industries Inc’s stock more attractive for value investors.

Now, let’s assess Barnwell Industries Inc’s EV/EBITDA ratio, also known as enterprise multiple. At 6.0, 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. Barnwell Industries Inc’s shareholder yield is higher than its industry median ratio of 0.39%. 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. Barnwell Industries Inc’s price-to-book ratio is higher than its industry median ratio of 1.31. This could make Barnwell Industries Inc less attractive to investors looking for a new addition to their portfolio.

Lastly, let’s take a look at Barnwell Industries Inc’s price-to-free-cash-flow ratio (P/FCF), which can indicate a company’s market value relative to its operating cash flow. Barnwell Industries Inc’s price-to-free-cash-flow ratio is lower than its industry median ratio of 6.65. This could make Barnwell Industries Inc more attractive because the lower P/FCF ratio indicates that Barnwell Industries Inc 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.

Canadian Natural Resources Ltd (USA)’s Value Grade

Value Grade:

Canadian Natural Resources Limited is a Canada-based independent crude oil and natural gas exploration, development and production company. The Company's segments include exploration and production, oil sands mining and upgrading, and midstream and refining. The exploration and production segment is focused on North America, specifically in Western Canada; the United Kingdom portion of the North Sea, and Cote d'Ivoire and South Africa in Offshore Africa. The oil sands mining and upgrading segment produces synthetic crude oil through bitumen mining and upgrading operations at Horizon Oil Sands and through its direct and indirect interest in the Athabasca Oil Sands Project. Within Western Canada in the midstream and refining segment, the Company maintains certain activities that include pipeline operations, an electricity co-generation system and an investment in the Northwest Redwater Partnership, a general partnership formed to upgrade and refine bitumen in the Province of 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.

Canadian Natural Resources Ltd (USA) has a Value Score of 68, which is considered to be undervalued.

Canadian Natural Resources Ltd (USA)’s price-earnings ratio is 12.5 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 Canadian Natural Resources Ltd (USA) less attractive for value investors.

Canadian Natural Resources Ltd (USA)’s price-to-book ratio is lower than its peers. This could make Canadian Natural Resources Ltd (USA) more attractive for value investors when compared to the industry median at 1.31.

You can read more about Canadian Natural Resources Ltd (USA)’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.

Epsilon Energy Ltd’s Value Grade

Value Grade:

Epsilon Energy Ltd. is an onshore focused independent natural gas and oil company. The Company is engaged in the acquisition, development, gathering and production of natural gas and oil reserves. It operates through three segments: Upstream, Gathering System, and Corporate. Upstream activities segment includes acquisition, exploration, development and production of oil and natural gas reserves on properties within the United States. Gathering System segment partner with two other companies to operate a natural gas gathering system. The Company holds leasehold rights to approximately 84,684 gross (15,463 net) acres. It has natural gas production in the Marcellus Shale in Pennsylvania and oil, natural gas liquids and natural gas production in the Permian Basin in Texas and New Mexico and in the Anadarko Basin in Oklahoma. Its subsidiaries include Epsilon Energy USA Inc., Epsilon Midstream, LLC, Altolisa Holdings, LLC, and Dewey Energy Holdings, 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.

Epsilon Energy Ltd has a Value Score of 63, which is considered to be undervalued.

Epsilon Energy Ltd’s price-earnings ratio is 23.5 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 Epsilon Energy Ltd less attractive for value investors.

Epsilon Energy Ltd’s price-to-book ratio is higher than its peers. This could make Epsilon Energy Ltd less attractive for value investors when compared to the industry median at 1.31.

You can read more about Epsilon Energy Ltd’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.

Permian Resources Corp’s Value Grade

Value Grade:

Permian Resources Corporation is an independent oil and natural gas company. The Company is focused on the acquisition, optimization and development of oil and natural gas properties. The Company's assets and operations are concentrated in the core of the Delaware Basin. Its position consists of over 479,500 net leasehold acres and approximately 94,900 net royalty acres across the Permian Basin. The majority of its assets are concentrated within the Delaware Basin in Eddy and Lea Counties, New Mexico and Reeves and Ward Counties, Texas.

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.

Permian Resources Corp has a Value Score of 72, which is considered to be undervalued.

Permian Resources Corp’s price-earnings ratio is 10.5 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 Permian Resources Corp more attractive for value investors.

Permian Resources Corp’s price-to-book ratio is higher than its peers. This could make Permian Resources Corp less attractive for value investors when compared to the industry median at 1.31.

You can read more about Permian 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.

Permianville Royalty Trust’s Value Grade

Value Grade:

Permianville Royalty Trust (the Trust) is a statutory trust formed by Enduro Resource Partners LLC (Enduro), as trustor, The Bank of New York Mellon Trust Company, N.A. (the Trustee), as trustee, and Wilmington Trust Company (the Delaware Trustee), as Delaware Trustee. The Trust is created to acquire and hold for the benefit of the Trust unitholders a net profits interest representing the right to receive approximately 80% of the net profits from the sale of oil and natural gas production from certain properties in the states of Texas, Louisiana and New Mexico held by Enduro. The properties in which the Trust holds the Net Profits Interest are referred to as the Underlying Properties. The Company’s Underlying Properties consist of producing and non-producing interests in oil and natural gas units, wells and lands in Texas, Louisiana and New Mexico. The Underlying Properties are divided into two geographic regions: the Permian Basin region and East Texas/North Louisiana region.

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.

Permianville Royalty Trust has a Value Score of 81, which is considered to be undervalued.

Permianville Royalty Trust’s price-earnings ratio is 6.7 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 Permianville Royalty Trust more attractive for value investors.

Permianville Royalty Trust’s price-to-book ratio is higher than its peers. This could make Permianville Royalty Trust less attractive for value investors when compared to the industry median at 1.31.

You can read more about Permianville Royalty Trust’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 79, which is considered to be undervalued.

Reserve Petroleum Co’s price-earnings ratio is 31.3 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 Reserve Petroleum Co less attractive for value investors.

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 1.31.

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 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.

• Barnwell Industries Inc stock has a Value Grade of A.
• Canadian Natural Resources Ltd (USA) stock has a Value Grade of B.
• Epsilon Energy Ltd stock has a Value Grade of B.
• Permian Resources Corp stock has a Value Grade of B.
• Permianville Royalty Trust stock has a Value Grade of A.
• Reserve Petroleum Co stock has a Value Grade of B.

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 Friday, September 27
• 3 Undervalued Oil & Gas - Exploration and Production Stocks for Thursday, September 26
• Why APA Corp (US)’s (APA) Stock Is Down 5.78%
• Why Chord Energy Corp’s (CHRD) Stock Is Down 4.07%

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