Are Investors Undervaluing PACCAR (PCAR) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company value investors might notice is PACCAR (PCAR). PCAR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 11.81, while its industry has an average P/E of 32.91. PCAR's Forward P/E has been as high as 18.10 and as low as 10.39, with a median of 11.91, all within the past year.
PCAR is also sporting a PEG ratio of 1.18. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PCAR's PEG compares to its industry's average PEG of 2.21. Within the past year, PCAR's PEG has been as high as 1.81 and as low as 1.04, with a median of 1.19.
We should also highlight that PCAR has a P/B ratio of 2.61. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 4.90. Within the past 52 weeks, PCAR's P/B has been as high as 2.93 and as low as 2.20, with a median of 2.53.
Finally, our model also underscores that PCAR has a P/CF ratio of 10.91. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. PCAR's current P/CF looks attractive when compared to its industry's average P/CF of 15.51. Over the past year, PCAR's P/CF has been as high as 12.21 and as low as 9.16, with a median of 10.68.
These figures are just a handful of the metrics value investors tend to look at, but they help show that PACCAR is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PCAR feels like a great value stock at the moment.
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