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Are Investors Undervaluing NGL Energy Partners (NGL) Right Now?

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 to watch right now is NGL Energy Partners (NGL). NGL is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

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Another valuation metric that we should highlight is NGL's P/B ratio of 1.48. 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 3.48. Over the past 12 months, NGL's P/B has been as high as 1.58 and as low as 0.86, with a median of 1.22.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. NGL has a P/S ratio of 0.1. This compares to its industry's average P/S of 0.29.

Finally, investors should note that NGL has a P/CF ratio of 2.19. 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. NGL's P/CF compares to its industry's average P/CF of 7.23. Over the past year, NGL's P/CF has been as high as 2.32 and as low as 1.06, with a median of 1.56.

These are just a handful of the figures considered in NGL Energy Partners's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that NGL is an impressive value stock right now.

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Zacks Investment Research