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Is Patterson Cos. (PDCO) Stock Undervalued Right Now?

Zacks Equity Research
·3 min read

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 stock to keep an eye on is Patterson Cos. (PDCO). PDCO is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

Investors will also notice that PDCO has a PEG ratio of 2.01. 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. PDCO's industry currently sports an average PEG of 2.59. Over the past 52 weeks, PDCO's PEG has been as high as 3.86 and as low as 1.07, with a median of 2.25.

Investors should also recognize that PDCO has a P/B ratio of 3.17. 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 stock's P/B looks attractive against its industry's average P/B of 4.40. Over the past year, PDCO's P/B has been as high as 3.22 and as low as 0.85, with a median of 1.36.

Finally, we should also recognize that PDCO has a P/CF ratio of 14.70. 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. PDCO's current P/CF looks attractive when compared to its industry's average P/CF of 35.19. Over the past 52 weeks, PDCO's P/CF has been as high as 17.04 and as low as 7.56, with a median of 11.70.

Value investors will likely look at more than just these metrics, but the above data helps show that Patterson Cos. Is likely undervalued currently. And when considering the strength of its earnings outlook, PDCO sticks out at as one of the market's strongest value stocks.


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Zacks Investment Research