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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
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.
PCAR is also sporting a PEG ratio of 1.22. 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 industry has an average PEG of 3.17 right now. Over the past 52 weeks, PCAR's PEG has been as high as 1.32 and as low as 0.94, with a median of 1.16.
Another valuation metric that we should highlight is PCAR's P/B ratio of 3. The P/B ratio pits a stock's market value against 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 4.38. Over the past 12 months, PCAR's P/B has been as high as 3.11 and as low as 2.58, with a median of 2.86.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PCAR has a P/S ratio of 1.43. This compares to its industry's average P/S of 1.5.
Finally, our model also underscores that PCAR has a P/CF ratio of 9.67. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PCAR's current P/CF looks attractive when compared to its industry's average P/CF of 17.82. PCAR's P/CF has been as high as 11.24 and as low as 8.57, with a median of 9.91, all within the past year.
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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PACCAR Inc. (PCAR) : Free Stock Analysis Report
