COTERRA ENERGY INC (NYSE:CTRA) Emerges as a Compelling Value Stock for Disciplined Investors

In the hunt for investment chances, many market participants use a disciplined, basic method called value investing. This plan, made famous by people like Benjamin Graham and Warren Buffett, centers on finding companies whose stock price is lower than their calculated real worth. The aim is to discover good businesses that the market has incorrectly priced for now, giving a possible "margin of safety" for the patient investor. One useful way to find such companies is by looking for stocks that show good basic strength and earnings, along with a good price—a mix that points to a company being both healthy and possibly priced too low.

COTERRA ENERGY INC (NYSE:CTRA) is a varied energy company with work in important U.S. areas, like the Permian, Marcellus, and Anadarko. A recent basic filter for "good value" stocks, which looks for good price scores along with acceptable marks in growth, earnings, and money strength, has pointed out CTRA as a possible pick for closer look by value-focused investors.

Valuation: The Base of the Idea

The main draw of Coterra Energy from a value view is its price measures. Based on ChartMill's basic study, the stock gets a good Valuation Rating of 8 out of 10. This number comes from several strong facts:

• Good Earnings Multiples: CTRA sells at a Price-to-Earnings (P/E) ratio of 12.07, which is lower than almost 69% of similar companies in the Oil, Gas & Consumable Fuels field. More important is its expected P/E ratio of 9.01, placing it as lower than over 80% of field rivals.
• Lower Price than the Wider Market: When set next to the S&P 500's average P/E of 26.51 and expected P/E of 23.13, CTRA looks much lower priced.
• Growth Adjustment: The stock's low PEG ratio, which changes the P/E for planned earnings growth, shows the market may not be fully counting the company's future growth.

For a value investor, these measures are key. They are the number-based beginning for seeing a difference between market price and real worth. A low P/E, especially when joined with growth, can mark a chance if the company's basic health stays solid.

Basic Strength: Earnings and Money Health

A low stock price by itself is not enough reason to invest; the main business must be healthy to avoid a "value trap." This is where Coterra's steady earnings and acceptable money health matter, backing the price idea.

Earnings is a clear plus, with a rating of 7. The company shows it can change sales into profit well:

• It has a solid Profit Margin of 23.25%, doing better than more than 81% of its field.
• Its Return on Invested Capital (ROIC) of 7.86% is higher than 73% of similar companies, showing good use of money to make profits.

Money Health gets a middle rating of 5, pointing to a steady but not perfect balance sheet. Key good points include a careful Debt-to-Equity ratio of 0.25, which is higher than two-thirds of the field, and a strong Debt-to-Free-Cash-Flow ratio of 2.71, meaning the company can pay off debt fast. These things are needed for value investors, as a good money base lowers risk and raises the chance that the company can handle economic changes and finally have its real worth seen by the market.

The Growth Driver

For a value stock to reach its possibility, it often needs a reason for growth. Coterra shows good movement here too, getting a Growth Rating of 8. The company is not still:

• Past Results: Sales grew by a strong 25.13% over the last year, with a good multi-year average growth rate of 21.44%.
• Future Plans: Experts see continued growth, with earnings per share expected to rise by almost 17% each year and sales by about 16% per year.

This growth part is important. It helps tell apart a truly lower priced company with a future from one that is just low due to lasting problems or drop. Growth gives the chance for increasing real worth over time, which can be a strong force for closing the difference with market price.

End and More Study

Coterra Energy Inc. shows a picture that fits several main rules of value investing: it sells at a lower price than both its field and the wider market, keeps strong earnings and a sensible money state, and is joined with a good growth path. This mix suggests the stock may be priced too low compared to its business basics.

It is key to remember that the energy field changes with cycles and is affected by product price changes, which adds a level of risk and difficulty to any investment idea. Also, the company's dividend steadiness has a small point of note, as dividend growth has recently grown faster than earnings growth.

For investors wanting to look at similar chances, the "Good Value Stocks" filter that found CTRA can be a helpful beginning. You can find more stocks that fit these needs of good price paired with acceptable basics by using this set stock screener.

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Disclaimer: This article is for information only and is not financial advice, a suggestion, or a deal to buy or sell any securities. The information given is based on supplied data and should not be the only base for an investment choice. Investors should do their own separate study and talk with a qualified financial advisor before making any investment choices. Past results do not show future outcomes.