Crescent Point Energy (CPG Stock) Should Value Investors Consider?
Value investing is a popular way to find great stocks in any market. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
These companies can be found by looking at several financial ratios and key metrics. This is a great way to identify the right company. Let’s put Crescent Point Energy Incorporate CPG stock into the equation to find out if this is a good option for value-oriented investors or if they should look elsewhere for top choices.
PE Ratio
Value investors pay attention to the Price-to-Earnings Ratio (or PE) as it is commonly known. This ratio is one of the most well-known financial ratios. It shows how much investors will pay for every dollar of earnings in a stock. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
As you can see, Crescent Point Energy’s trailing twelve-month PE ratio is 5.05.
Image Source: Zacks Investment Research
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 stands at about 18.33. If we focus on the long-term PE trend, Crescent Point Energy’s current PE level puts it above its midpoint (which is 8.55) over the past five years. It is also well below its highs, suggesting it could be a solid entry point.
Image Source: Zacks Investment Research
Further, the stock’s PE also compares favorably with the Zacks Oils-Energy sector’s trailing twelve months PE ratio, which stands at 5.91. This suggests that the stock is currently relatively undervalued compared to its peers.
Image Source: Zacks Investment Research
We should also point out that Crescent Point Energy has a forward PE ratio (price relative to this year’s earnings) of just 5.51, which is higher than the current level. So, it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
The Price/Sales ratio is another important metric. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. This metric is more popular than others that focus on value because it measures sales. It’s much harder to manipulate earnings with accounting tricks than sales.
Crescent Point Energy’s current P/S ratio is 1.19. This is a bit lower than the S&P 500 average, which comes in at 3.47x right now. This is also well below the stock’s highs in particular the past few decades, as shown in the chart.
Image Source: Zacks Investment Research
If anything, this suggests some level of undervalued trading—at least compared to historical norms.
Broad Value Outlook
Crescent Point Energy has a Value Score (A) in aggregate. It is among the top 20% stocks that we cover with this look. Crescent Point Energy is a solid investment choice for value investors. This is evident in some of its key metrics.
The industry average P/CF ratio of 2.69 is a great value indicator. CPG is an excellent value choice from multiple angles.
What do you think about the stock as a whole?
Crescent Point Energy is a great choice for value investors. But, there are many factors you need to consider before making a decision to invest in this name. Notably, the company has a Growth score of A and a momentum score of B. This gives CPG a Zacks VGM score — or its overarching fundamental grade — of A. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have not witnessed any revisions in the past 30 days. The full-year estimate has increased 3.5%, despite the fact that the consensus quarter estimate has not changed in the past month. The chart below shows the trend in consensus estimates and the most recent price action.
Crescent Point Energy Corporation Price and Consensus
Crescent Point Energy Corporation price-consensus-chart | Crescent Point Energy Corporation Quote
Stock currently holds a Zacks #3 (Hold) rank. We are therefore looking for near-term in-line performance.
Bottom Line
Crescent Point Energy is a great choice for value investors. It is hard to beat the impressive list of statistics. It is difficult to be excited about the company with its sluggish industry ranking (amongst the Bottom 11% of over 250 industries) as well as a Zacks Rank 3. As you can see, the Zacks Oil and Gas Exploration and Production Canada industry has outperformed the wider market over the past two-years.
Image Source: Zacks Investment Research
Value investors may want to wait until estimates turn around for this name before making a decision, but once they do, this stock could prove to be a compelling choice.
Get the most recent Zacks Investment Research recommendations. Download 7 Best Stocks in the Next 30 Days Today Click to get this free report
Crescent Point Energy Corporation (CPG) : Free Stock Analysis Report