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.

Click the button below to learn more about A+ Investor and subscribe today.

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 Monday, September 30, 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.

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 97, which is considered to be undervalued.

When you look at Equinor ASA (ADR)’s price-to-sales ratio at 0.68 compared to the industry median at 0.90, this company has a lower price relative to revenue compared to its peers. This could make Equinor ASA (ADR)’s stock more attractive for value investors.

Equinor ASA (ADR)’s price-earnings ratio is 7.63 compared to the industry median at 9.39. This means it has a lower share price relative to earnings compared to its peers. This could make Equinor ASA (ADR) more attractive for value investors.

Now, let’s assess Equinor ASA (ADR)’s EV/EBITDA ratio, also known as enterprise multiple. At 2.5, when compared to the industry median of 5.8, 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. Equinor ASA (ADR)’s shareholder yield is higher than its industry median ratio of 9.27%. 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. Equinor ASA (ADR)’s price-to-book ratio is higher than its industry median ratio of 1.42. This could make Equinor ASA (ADR) less attractive to investors looking for a new addition to their portfolio.

Shell PLC (ADR)’s Value Grade

Value Grade:

Shell plc is an energy and petrochemical company. It specializes in exploration, production, refining and marketing of oil and natural gas, and the manufacturing and marketing of chemicals. Its segments include Integrated Gas, Upstream, Marketing, Chemicals and Products, Renewable and Energy Solutions, and Corporate. The Integrated Gas segment offers liquefied natural gas, conversion of natural gas into gas-to-liquids fuels and other products. The Upstream segment includes exploration and extraction of crude oil, natural gas and natural gas liquids. The Marketing segment includes mobility, lubricants, and sectors and decarbonization businesses. The Chemicals and Products segment includes chemicals manufacturing plants with their marketing network, and refineries which turn crude oil and other feedstocks into a range of oil products. The Renewables and Energy Solutions segment offers power activities, comprising electricity generation, marketing and trading of power and pipeline gas.

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.

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

Shell PLC (ADR)’s price-earnings ratio is 11.8 compared to the industry median at 9.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Shell PLC (ADR) less attractive for value investors.

Shell PLC (ADR)’s price-to-book ratio is higher than its peers. This could make Shell PLC (ADR) less attractive for value investors when compared to the industry median at 1.42.

You can read more about Shell PLC (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.

Santos Ltd (ADR)’s Value Grade

Value Grade:

Santos Limited is focused on three regional business unit, including Cooper Basin, Queensland and New South Wales (NSW) and (PNG), now form the Eastern Australia and PNG Business Unit, Northern Australia and Timor-Leste, and Western Australia now form the Western Australia, Northern Australia and Timor-Leste Business Unit and Alaska is the third regional Business Unit. Supporting these three business units are two functional divisions: Santos Energy Solutions and Upstream Gas and Liquids. The Cooper Basin produces natural gas, gas liquids and crude oil. Gas is sold primarily to domestic retailers, industry and for the production of liquefied natural gas, while gas liquids and crude oil are sold in domestic and export markets. Its GLNG project in Queensland produces liquefied natural gas (LNG) for export to global markets from the LNG plant at Gladstone and is also sold to the domestic market. Northern Australia and Timor-Leste is centered on the Bayu-Undan/Darwin LNG (DLNG) project.

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.

Santos Ltd (ADR) has a Value Score of 88, which is considered to be undervalued.

Santos Ltd (ADR)’s price-earnings ratio is 12.1 compared to the industry median at 9.4. This means that it has a higher price relative to its earnings compared to its peers. This makes Santos Ltd (ADR) less attractive for value investors.

Santos Ltd (ADR)’s price-to-book ratio is higher than its peers. This could make Santos Ltd (ADR) less attractive for value investors when compared to the industry median at 1.42.

You can read more about Santos Ltd (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.

• Equinor ASA (ADR) stock has a Value Grade of A.
• Shell PLC (ADR) stock has a Value Grade of A.
• Santos Ltd (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.

• Fall Changes Bring Satellites and Salons
• 3 Undervalued Oil & Gas - Integrated Stocks for Monday, September 30
• 3 Undervalued Oil & Gas - Integrated Stocks for Friday, September 27
• Why Cenovus Energy Inc (US)’s (CVE) Stock Is Down 4.18%

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.