Should Value Investors Buy PACCAR (PCAR) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.
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 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.
One stock to keep an eye on is PACCAR (PCAR). PCAR is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 11.02, which compares to its industry's average of 31.01. Over the past 52 weeks, PCAR's Forward P/E has been as high as 13.22 and as low as 9.44, with a median of 11.63.
Investors will also notice that PCAR has a PEG ratio of 1.10. 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 has an average PEG of 1.92 right now. PCAR's PEG has been as high as 1.32 and as low as 0.94, with a median of 1.16, all within the past year.
We should also highlight that PCAR has a P/B ratio of 2.73. The P/B ratio pits a stock's market value against 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 3.84. Within the past 52 weeks, PCAR's P/B has been as high as 3.11 and as low as 2.54, with a median of 2.83.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. PCAR has a P/S ratio of 1.26. This compares to its industry's average P/S of 1.77.
Finally, investors will want to recognize that PCAR has a P/CF ratio of 8.81. 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. PCAR's current P/CF looks attractive when compared to its industry's average P/CF of 15.19. PCAR's P/CF has been as high as 11.24 and as low as 8.57, with a median of 9.95, 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
