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Are Investors Undervaluing Paccar (PCAR) Right Now?

Zacks Equity Research
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.

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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 to watch right now is Paccar (PCAR). PCAR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock is trading with P/E ratio of 9.93 right now. For comparison, its industry sports an average P/E of 9.94. Over the past 52 weeks, PCAR's Forward P/E has been as high as 16.43 and as low as 8.60, with a median of 11.17.

PCAR is also sporting a PEG ratio of 0.92. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. PCAR's industry currently sports an average PEG of 1.35. Over the last 12 months, PCAR's PEG has been as high as 1.64 and as low as 0.80, with a median of 1.07.

We should also highlight that PCAR has a P/B ratio of 2.34. 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 stock's P/B looks solid versus its industry's average P/B of 2.39. Within the past 52 weeks, PCAR's P/B has been as high as 3.45 and as low as 2.05, with a median of 2.62.

These are only a few of the key metrics included in Paccar's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PCAR looks like an impressive value stock at the moment.


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