Are Investors Undervaluing Packaging Corporation of America (PKG) 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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
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.
Packaging Corporation of America (PKG) is a stock many investors are watching right now. PKG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Investors should also recognize that PKG has a P/B ratio of 3.59. The P/B is a method of comparing a stock's market value to 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 7.92. Within the past 52 weeks, PKG's P/B has been as high as 3.66 and as low as 2.80, with a median of 3.36.
Finally, we should also recognize that PKG has a P/CF ratio of 10.75. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 20.45. Over the past 52 weeks, PKG's P/CF has been as high as 10.93 and as low as 7.55, with a median of 8.57.
Value investors will likely look at more than just these metrics, but the above data helps show that Packaging Corporation of America is likely undervalued currently. And when considering the strength of its earnings outlook, PKG sticks out at as one of the market's strongest value stocks.
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Packaging Corporation of America (PKG) : Free Stock Analysis Report
