Energy stocks are the worst-performing equities over the last three months, but there’s one small concession for the sector. At the very least, it hasn’t plummeted as much as the oil market.
Oil prices have tumbled about 30 percent after hitting four-year highs at the start of October, with U.S. crude tumbling below $50 a barrel on Thursday after reaching nearly $77 weeks ago. Meanwhile, the S&P 500 energy sector is down roughly 15 percent over the same period.
Analysts and portfolio managers say it makes sense that energy stocks fell less than oil prices over the last eight weeks. Since the sector didn’t run up as much as crude futures during September’s oil market rally, energy stocks weren’t poised for such a precipitous fall.
Energy portfolio managers also say the flood of money into the technology sector throughout much of this year meant investors largely overlooked energy stocks even though they were clearly undervalued.
Energy did briefly outperform other sectors from early September through early October, when oil prices spiked ahead of U.S. sanctions on Iran’s energy industry. But the slide in oil prices is once again keeping investors on the sidelines.
Oil market ‘out of whack’
To be sure, the energy sector seldom rises and falls in lockstep with oil prices. That’s largely because not all stocks in the space are directly linked to the cost of crude. Energy giants like Exxon Mobil and Chevron have refining businesses that benefit from low oil prices, and profits at infrastructure companies mostly depend on the volumes flowing through their pipelines.
But even independent drillers focused on producing and selling oil typically have insurance against falling prices, said Essner. Many drillers take out hedges, a strategy that essentially locks in a price for oil shipments well ahead of delivery to customers.
Stock investors are also primarily focused on a company’s future earnings and growth, Essner noted. Since the worst of the oil price declines are concentrated in contracts for delivery in the next few months, investors aren’t necessarily panicking about a prolonged oil price slump.
Shares of PepsiCo, Inc. (NASDAQ:PEP) flaunted a rapid change of -0.19% to reach at $118.27 in the last hour of Thursday’s trading session. The company has experienced volume of 2,878,675 shares while on average the company has a capacity of trading 4.43M share.
PepsiCo, Inc. (PEP) holds the market capitalization of $166.76B along with 1.41B outstanding shares. The stock price is moving -23.27% off from the highest level of twelve months and -3.46% above from twelve months low. For the stock, price target value has been calculated at $117.10.
What Historical Figures Say About Synthetic Biologics (NASDAQ: PEP)?
Before trading, trader, investor or shareholder must have an eye on stock’s historical performance. Analysts review historical return data when trying to predict future returns or to estimate how a security might react to a particular situation, such as a drop in consumer demand. Historical returns can also be useful when estimating where future points of data may fall in terms of standard deviations.
Analyzing historical data can give some perception of how a security or market has reacted to various different variables, from regular economic cycles to sudden world events. Shareholders looking to interpret historical returns should keep one caveat in mind: you can’t assume that the future will be like the past. The older the historical return data is, the more likely it is to be less useful when predicting future returns. Historical return data for PEP stock is described below:
PepsiCo, Inc. has shown weekly performance of 2.59%. Its six months performance 17.98% indicated a movement while its yearly performance reflected a trend of 1.22%. Year-to-date (YTD) performance of the stock illustrate trend of -1.38%. The company has Relative Strength Index (RSI 14) of 62.56 along with Average True Range (ATR 14) of 2.06. Its weekly and monthly volatility is 1.60%, 1.68% respectively. The company’s beta value is at 0.57.
What is PEG Ratio?
PEG ratio or Price/Earnings-Growth ratio is an attempt to normalize the P/E ratio with the expected earnings growth rate of the company.
The idea behind the PEG ratio for stocks is quite simple:
A low P/E ratio can be justified if the future expected earnings growth is low. A fast growing company on the other hand is able to command a higher price to earnings multiple for its stock. To get more accurate idea of the relative valuation of a company, we need to consider the P/E ratio in conjunction with the future earnings per share growth rate.
WHY IT MATTERS:
The PEG ratio acts as a measure of value that takes into account future growth. Using this metric, investors can gauge whether high-growth stocks may be undervalued, even if they don’t appear so with the more common P/E ratio.
Earnings growth expectations are completely unreliable. Any use of the formula is only as good as the numbers that are fed into it as inputs. Any expected earnings growth in the future is just an expectation, and they vary wildly between different analysts. Even if there is a concensus, the future generally turns out to be different than planned. There is competitive changes, loss of market power, product substitutions, management missteps, etc, that we have no way of knowing today.
Typically P/E ratios are backward looking while the earnings growth rate is a forward looking metric. Future P/E ratio will be different than the one we use today. You could project a future P/E ratio if you wish, but this will introduce further uncertainity in the calculations. Still, many investors are fond of using the concept of Forward P/E and Forward PEG ratio. I strongly advise against this.
Negative PEG Ratio Meaning
A negative PEG ratio does not imply that the stock is a bad investment. It just means that you need to consider other ways of looking at the stock before you can judge if this is a good investment or not.
Is It Overvalued? Look at the PEG Ratio
PepsiCo, Inc. (NASDAQ:PEP) currently has a PEG ratio of 2.94 where as its P/E ratio is 20.41. The company’s price to sales ratio for trailing twelve months is 2.58 and price to book ratio for most recent quarter is 16.27, whereas price to cash per share for the most recent quarter is 12.00. PEP’s price to free cash flow for trailing twelve months is 73.43. Its quick ratio for most recent quarter is 1.20 along with current ratio for most recent quarter of 1.30. Total debt to equity ratio of the company for most recent quarter is 3.41 whereas long term debt to equity ratio for most recent quarter is 2.98. PepsiCo, Inc. has a Return on Assets of 6.30%. The company currently has a Return on Equity of 46.80% and Return on Investment of 16.40%.