A strong performer from today's morning trading session is Par Pacific, whose shares rose 4.1% to $27.47 per share. For those of you thinking about investing in the stock, here is a brief value analysis of the stock using the company's basic fundamental ratios.
Par Pacific Holdings, Inc. owns and operates energy and infrastructure businesses. The company belongs to the Energy sector, which has an average price to earnings (P/E) ratio of 9.11 and an average price to book (P/B) ratio of 1.45. In contrast, Par Pacific has a trailing 12 month P/E ratio of 5.7 and a P/B ratio of 3.0.
P/B ratios are calculated by dividing the company's market value by its equity's book value. Equity refers to all of the company's assets minus its liabilities. Traditionally, a P/B ratio of around 1 shows that a company is fairly valued, but owing to consistently higher valuations in the modern era, investors generally compare against sector averages.
When we divide Par Pacific's P/E ratio by its expected EPS growth rate of the next five years, we obtain its PEG ratio of -0.09. Since it's negative, the company actually has negative growth expectations, and most investors will probably avoid the stock unless it has an exceptionally low P/E and P/B ratio.
