Seeking Alpha
Long/short equity, deep value, value
Profile| Send Message|
( followers)  

With all the volatility last week, it's almost impossible to keep one’s head from spinning. Luckily this has thrown a lot of doubt into the market, which in our view always has the potential to offer some type of opportunity one way or another. The market may have ended up somewhat flat for the week but that can’t be said for individual stocks.

The forward PE ratio is a valuation metric that illustrates what Wall Street is willing to pay for a company’s future earnings relative to the current stock price. The ratio can either use the next full-year fiscal period or next 12 months. If earnings are expected to grow, then the forward PE ratio should be lower than the current PE ratio.

Operating margin is a profitability margin that illustrates what amount of revenue is left after variable and other costs are covered. A healthy operating margin is never frowned upon as it helps cover interest on debt and pay taxes. Investors generally look for trends over time relative to this ratio to get a better idea of how the company is performing.

We ran a screen for companies that were only in the energy sector. From this pool we screened for companies that not only had a low forward PE ratio (X<10) but also had a sound operating margin (X>20).

The list is ranked from highest to lowest forward PE ratio. Short float info is as of April 15.

1. Berry Petroleum (BRY)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 2,604M

Beta

2.50

Analyst Sentiment

11/13 -List Buy/Outperform (Bullish)

This an energy company that engages in the exploration, development, production of crude oil and natural rdcgas. The firm’s forward PE is 9.83; BRY’s operating margin is 20.87%. The short float is 8.80%.

2. Whiting Petroleum Corporation (WLL)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 5,817M

Beta

2.05

Analyst Sentiment

22/28 -List Buy/Outperform (Bullish)

The company acquires, develops, and produces oil and gas within the US with a focus on areas such as the Permian Basin. The firm’s forward PE is 9.40. WLL’s operating margin is 54.81%. The short float is 3.80%.

3. Rowan Companies, Inc. (RDC)

Sector

Energy

Industry

Oil & Gas Drilling

Market Cap

$ 4,363M

Beta

1.86

Analyst Sentiment

24/36 -List Buy/Outperform (Bullish)

The company provides contract-drilling services worldwide. The firm also manufactures equipment for mining, timber activities, and drilling. The firm’s forward PE is 9.24. RDC’s operating margin is 21.49%. The short float is 3.60%.

4. Pioneer Southwest Energy Partners (PSE)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 895M

Beta

0.38

Analyst Sentiment

4/5 -List Hold/Neutral (Neutral)

The company is a limited partnership that acquires gas and oil assets within the US. The firm’s forward PE is 9.22. PSE’s operating margin is 58.16%. The short float is 0.90%.

5. Occidental Petroleum Corporation (OXY)

Sector

Energy

Industry

Oil & Gas Integrated

Market Cap

$ 69,183M

Beta

1.00

Analyst Sentiment

15/24 -List Buy/Outperform (Bullish)

The company has three segments: Chemical , midstream and marketing, and oil and gas. The firm’s forward PE is 8.91. OXY’s operating margin is 38.41%. The short float is 0.80%.

6. Newfield Exploration Company (NYSE:NFX)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 7,337M

Beta

1.56

Analyst Sentiment

18/26 -List Buy/Outperform (Bullish)

The company explores, develops, and acquires oil and gas properties. The firm’s forward PE is 8.90. NFX’s operating margin is 32.61%.

7. Devon Energy Corp (DVN)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 28,322M

Beta

1.13

Analyst Sentiment

18/31 -List Buy/Outperform (Bullish)

The company including explores, develops, &transportation oil and gas. The firm’s forward PE is 8.70. DVN operating margin is 35.9%. The short float is 1.50%.

8. Cimarex Energy Company (XEC)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 5,690M

Beta

1.59

Analyst Sentiment

13/18 -List Buy/Outperform (Bullish)

The company independently explores for and produces oil and gas within the US. The firm’s forward PE is 8.33. XEC’s operating margin is 56.48%. The short float is 2.40%.

9. Noble Corporation (NE)

Sector

Energy

Industry

Oil & Gas Drilling

Market Cap

$ 7,900M

Beta

1.06

Analyst Sentiment

24/41 -List Buy/Outperform (Bullish)

The company provides a variety of services within the oil and gas industry. The firm’s forward PE is 8.15 NE’s operating margin is 32.63%.

10. Apache Corporation (APA)

Sector

Energy

Industry

Oil & Gas E&P

Market Cap

$ 39,614M

Beta

1.23

Analyst Sentiment

22/28 -List Buy/Outperform (Bullish)

The company develops and produces crude oil, natural gas, and natural gas liquids. The firm’s forward PE is 7.76. APA’s operating margin is 43.05%. The short float is 1.60%.

As usual, we hope this list helps as investors do their own due diligence on companies and look for opportunities in the energy sector.

Source: 10 Undervalued Energy Companies With Strong Profitability