Interested in finding undervalued stocks in the oil & gas sector? For ideas on where to look, we ran a screen you might be interested in.
We screened the oil & gas sector for stocks that appear undervalued relative to EPS trends. Based on the theoretical assumption that if P/E is equal to a constant K, growth in EPS estimates should be matched by proportionate growth in price. When they don't match up, a mispricing may have occurred. We screened for those exhibiting this mismatch between changes in EPS estimate and price.
Interactive Chart: Press Play to compare changes in analyst ratings over the last two years for the stocks mentioned 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. Bill Barrett Corp. (BBG): Engages in the exploration, development, and production of natural gas and crude oil principally in the Rocky Mountain region of the United States. Market cap at $868.14M, most recent closing price at $18.03. The EPS estimate for the company's current year increased from 0.08 to 0.09 over the last 30 days, an increase of 12.5%. This increase came during a time when the stock price changed by 0.77% (from 18.2 to 18.34 over the last 30 days).
2. Penn West Petroleum Ltd. (PWE): Engages in acquiring, exploring, developing, exploiting, and holding interests in petroleum and natural gas properties and related assets in North America. Market cap at $5.27B, most recent closing price at $10.99. The EPS estimate for the company's current year increased from 0.46 to 0.52 over the last 30 days, an increase of 13.04%. This increase came during a time when the stock price changed by 1.62% (from 11.08 to 11.26 over the last 30 days).
3. Energy XXI (Bermuda) Limited (EXXI): Engages in the acquisition, exploration, development, and operation of oil and natural gas properties onshore in Louisiana and Texas and offshore in the Gulf of Mexico. Market cap at $2.59B, most recent closing price at $32.69. The EPS estimate for the company's current year increased from 2.96 to 3.11 over the last 30 days, an increase of 5.07%. This increase came during a time when the stock price changed by 1.04% (from 32.69 to 33.03 over the last 30 days).
* EPS data sourced from Yahoo! Finance, all other data sourced from Finivz.
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.