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Should Value Investors Buy Plains All American Pipeline (PAA) Stock?
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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One stock to keep an eye on is Plains All American Pipeline (PAA - Free Report) . PAA is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 14.35, which compares to its industry's average of 14.45. PAA's Forward P/E has been as high as 15.23 and as low as 11.75, with a median of 12.77, all within the past year.
We should also highlight that PAA has a P/B ratio of 1.26. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 2.39. Over the past 12 months, PAA's P/B has been as high as 1.26 and as low as 0.93, with a median of 1.08.
Finally, investors will want to recognize that PAA has a P/CF ratio of 6.74. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 10.03. PAA's P/CF has been as high as 6.77 and as low as 4.67, with a median of 5.83, all within the past year.
These are only a few of the key metrics included in Plains All American Pipeline's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PAA looks like an impressive value stock at the moment.