ConocoPhillips' Stock Is About as Cheap as It's Been Since 2023. Here's 1 Thing to Know Before You Buy.

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Ryan Vanzo, The Motley Fool

Thu, Mar 27, 2025, 6:58 AM 3 min read

Despite a beardown rebound this month, ConocoPhillips (NYSE: COP) banal remains cheap, according to respective valuation metrics. But you request to beryllium looking ahead, not behind, to spot it. That's due to the fact that valuation metrics similar the price-to-sales ratio and the price-to-earnings ratio are backward-looking, utilizing figures that person already been achieved.

Analysts are reporting that ConocoPhillips has a brighter aboriginal than past. And if you show the close ratios, you whitethorn reason that shares are a bargain close now.

The EV/EBITDA (enterprise value/earnings earlier interest, taxes, depreciation, and amortization) ratio is simply a large metric to usage to gauge the attractiveness of lipid stocks similar ConocoPhillips. That's due to the fact that it adjusts for definite unsocial aspects of the manufacture similar precocious superior intensity, indebtedness levels, and net cyclicality. It has a greater absorption connected currency flows, giving you a much accordant knowing of the concern versus profits oregon income figures.

When looking astatine ConocoPhillips' EV/EBITDA ratio, shares don't look overly cheap, trading astatine astir 6 times EBITDA -- astir successful enactment with wherever shares traded astatine the extremity of 2023. But past results aren't what volition matter. Future results volition thrust the absorption of the stock price. And erstwhile you excavation into expert expectations, shares look cheaper than they've been successful immoderate time.

Using expert estimates (which admittedly could beryllium wrong), we tin cipher that ConocoPhillips' banal trades astatine 5.3 times guardant EBITDA. So based connected what analysts judge the institution volition gain implicit the twelvemonth ahead, the banal is cheaper than astatine archetypal glance. Of course, shares were adjacent cheaper a fewer weeks agone earlier the rebound. But importantly, they weren't a bargain until you looked astatine forward-looking ratios. If you had done that, you would person seen that the banal was priced adjacent its cheapest levels since 2023.

To beryllium clear, ConocoPhillips banal isn't the bargain it was successful aboriginal March. But shares are inactive cheaper than they archetypal appear. And monitoring guardant ratios that incorporated expert estimates tin assistance you place your adjacent buying opportunity.

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