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Is Imperial Oil (IMO) a Great Value Stock Right Now?

Zacks Equity Research
·3 min read

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

Imperial Oil (IMO) is a stock many investors are watching right now. IMO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Investors will also notice that IMO has a PEG ratio of 0.51. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. IMO's PEG compares to its industry's average PEG of 1.22. IMO's PEG has been as high as 0.57 and as low as 0.40, with a median of 0.49, all within the past year.

We should also highlight that IMO has a P/B ratio of 0.93. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.23. Within the past 52 weeks, IMO's P/B has been as high as 1.28 and as low as 0.91, with a median of 1.11.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. IMO has a P/S ratio of 0.67. This compares to its industry's average P/S of 0.7.

These are only a few of the key metrics included in Imperial Oil's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, IMO looks like an impressive value stock at the moment.


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