4 Oil And Gas Stocks Undervalued To The Graham Number

4 Oil And Gas Stocks Undervalued To The Graham Number

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Do you consider yourself a value investor? If so, we ran a screen looking for potentially undervalued oil and gas drilling stocks that may interest you.

We screened a universe of oil and gas drilling stocks for those that appear undervalued relative to the Graham Number. The Graham Number is a measure of maximum fair value created by the "godfather of value investing," Benjamin Graham.

It is based on a stock's EPS and book value per share (BVPS).

Graham Number = SQRT(22.5 x TTM EPS x MRQ BVPS)

The equation assumes that P/E should not be higher than 15, and P/BV should not be higher than 1.5. Stocks trading well below their Graham Number may be undervalued.

For an interactive version of this chart, click on the image below. Analyst ratings sourced from Zacks Investment Research.

 

Do you think these stocks should be trading higher? Use this list as a starting point for your own analysis.

1. C&J Energy Services, Inc. (CJES, Earnings, Analysts, Financials): Provides specialty equipment services for oil and natural gas exploration and production companies in the Texas, Louisiana, and Oklahoma regions of the United States. Market cap at $1.22B, most recent closing price at $23.03. Diluted TTM earnings per share at 3.82, and a MRQ book value per share value at 10.61, implies a Graham Number fair value = sqrt(22.5*3.82*10.61) = $30.20. Based on the stock's price at $23.02, this implies a potential upside of 31.18% from current levels.
 

2. Gulfmark Offshore, Inc. (GLF, Earnings, Analysts, Financials): Offers marine specialty services to offshore oil and natural gas drilling rigs and platforms. Market cap at $924.58M, most recent closing price at $34.32. Diluted TTM earnings per share at 1.82, and a MRQ book value per share value at 39.4, implies a Graham Number fair value = sqrt(22.5*1.82*39.4) = $40.17. Based on the stock's price at $34.65, this implies a potential upside of 15.92% from current levels.

 

3. Hess Corporation (HES, Earnings, Analysts, Financials): Operates as an integrated energy company. Market cap at $23.18B, most recent closing price at $67.88. Diluted TTM earnings per share at 4.46, and a MRQ book value per share value at 60.67, implies a Graham Number fair value = sqrt(22.5*4.46*60.67) = $78.03. Based on the stock's price at $58.9, this implies a potential upside of 32.47% from current levels.

 

4. Tesoro Corporation (TSO, Earnings, Analysts, Financials): Engages in refining and marketing petroleum products in the United States. Market cap at $6.75B, most recent closing price at $48.09. Diluted TTM earnings per share at 4.19, and a MRQ book value per share value at 31.45, implies a Graham Number fair value = sqrt(22.5*4.19*31.45) = $54.45. Based on the stock's price at $44.58, this implies a potential upside of 22.14% from current levels.
 

 

 

List compiled by Sabina Bhatia. EPS and BVPS data sourced from Yahoo! Finance, all other data sourced from Finviz. Did you find this list useful as a starting point for your analysis? Do you have a list requests? Leave your comments below and we’ll do our best to deliver.​

 

 

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