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Are Investors Undervaluing Patrick Industries (PATK) Right Now?

Zacks Equity Research

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 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 Patrick Industries (PATK). PATK is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock is trading with a P/E ratio of 18.63, which compares to its industry's average of 18.74. Over the past 52 weeks, PATK's Forward P/E has been as high as 24.07 and as low as 4.43, with a median of 12.15.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PATK has a P/S ratio of 0.73. This compares to its industry's average P/S of 1.21.

Finally, investors should note that PATK has a P/CF ratio of 10.80. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 16.63. PATK's P/CF has been as high as 11.61 and as low as 2.83, with a median of 7.18, all within the past year.

These are only a few of the key metrics included in Patrick Industries'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, PATK looks like an impressive value stock at the moment.


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Zacks Investment Research