Is Diamondback Energy (FANG) Stock Undervalued Right Now?

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Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the “Value” category. When paired with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

One company value investors might notice is Diamondback Energy (FANG). FANG is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 5.68, while its industry has an average P/E of 6.58. Over the last 12 months, FANG’s Forward P/E has been as high as 10.90 and as low as 5.17, with a median of 7.03.

Another notable valuation metric for FANG is its P/B ratio of 1.86. The P/B ratio is used to compare a stock’s market value with its book value, which is defined as total assets minus total liabilities. This company’s current P/B looks solid when compared to its industry’s average P/B of 3.53. Over the past year, FANG’s P/B has been as high as 2 and as low as 1.03, with a median of 1.56.

Finally, our model also underscores that FANG has a P/CF ratio of 7.26. This figure highlights a company’s operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 11.08. Over the past year, FANG’s P/CF has been as high as 12.67 and as low as -118.46, with a median of 6.65.

Another great Oil and Gas – Exploration and Production – United States stock you could consider is SilverBow Resources (SBOW), which is a # 1 (Strong Buy) stock with a Value Score of A.

SilverBow Resources sports a P/B ratio of 2 as well; this compares to its industry’s price-to-book ratio of 3.53. In the past 52 weeks, SBOW’s P/B has been as high as 5.26, as low as 1.04, with a median of 2.21.

These are only a few of the key metrics included in Diamondback Energy and SilverBow Resources strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, FANG and SBOW look like an impressive value stock at the moment.

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Diamondback Energy, Inc. (FANG) : Free Stock Analysis Report
 
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