Should Value Investors Buy Sunoco LP (SUN) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
Sunoco LP (SUN) is a stock many investors are watching right now. SUN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 11.90. This compares to its industry's average Forward P/E of 16.46. Over the last 12 months, SUN's Forward P/E has been as high as 31.20 and as low as 9.80, with a median of 12.63.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. SUN has a P/S ratio of 0.18. This compares to its industry's average P/S of 0.53.
Finally, investors will want to recognize that SUN has a P/CF ratio of 6.43. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.42. Over the past year, SUN's P/CF has been as high as 7.95 and as low as -136.49, with a median of 6.44.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Sunoco LP is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, SUN feels like a great value stock at the moment.
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