- Looking at things on a price-to-book basis, energy stocks are selling for just 55% of the broader S&P 500, according to a note this week from BAML - the lowest level since 1986. On average, energy has been 85% as expensive as the S&P.
- Book values can change, but do tend to be more stable than earnings - while ExxonMobil's EPS is expected to fall 45% this year, its book value is seen slipping just 1%.
- Jack Hough takes a look at three names trading at particularly large discounts:
- Chevron (CVX +1.5%) sells for 1.1x book vs. a 10-year average of 1.74x. Though cash flow has turned negative, JPMorgan's Phil Gresh says the risk of a dividend cut is "near zero."
- Apache (APA +1.2%) sells for 1.07x book vs. a 10-year average of 1.5x. The company has a recent market cap just under $18B, with $6.5B in available liquidity, including $3B in cash - putting it in position to buy assets on the cheap.
- Devon Energy (DVN +2%) sells for 0.88x book vs. its 10-year average of 1.47x. The profits are expected to fall by more than half this year, the company is growing production and cutting well costs in key properties.