Is CVR Energy, Inc. (CVI) Overvalued?

When compared to a few of its competitors, however, results are mixed. CVR Energy’s P/B, which is about 3.6, is less than that of Northern Tier but higher than Delek US Holdings, Inc. (NYSE:DK). So Delek is trading cheap when compared to the other two.

Trailing P/E

Price/Earnings ratio is market value divided by earnings per share and it measures whether a stock is undervalued or overvalued compared to its industry and competitors. The average industry P/E ratio is 12.8, while CVR Energy’s is 13.3.

The small difference between the two ratios shows that CVR Energy is valued well compared to its industry. CVR Energy, however, is pricier than Northern Tier and Delek, which have P/E ratios of 8.6 and 11.2, respectively. It’s worth mentioning that for the fifth time, Delek has beat its quarterly earnings estimates, which indicates that its earnings are increasing continuously despite a lower P/E.

Foolish bottom line

CVR Energy is a little expensive when compared to its competitors and the industry as a whole. It can, however, be considered a safe investment because current market and company-specific factors are favorable.

The industry is growing because of attractive fuel prices in the market. For its part, CVR Energy has been benefiting from the aggressive strategies implemented by Icahn, such as the spin-off of CVR Refining. So from an investment perspective, I am still bullish about CVR.

The article Is CVR Energy Overvalued? originally appeared on Fool.com and is written by Nikita Dugar.

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