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Are Investors Undervaluing Imperial Oil (IMO) Right Now?

Zacks Equity Research

Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.

Imperial Oil (IMO) is a stock many investors are watching right now. IMO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors should also note that IMO holds 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 industry has an average PEG of 1.21 right now. Within the past year, IMO's PEG has been as high as 0.57 and as low as 0.40, with a median of 0.49.

Another valuation metric that we should highlight is IMO's P/B ratio of 1.03. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against 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 0.95, with a median of 1.12.

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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