Should Value Investors Buy Packaging Corporation of America (PKG) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 company to watch right now is Packaging Corporation of America (PKG). PKG is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.
Another valuation metric that we should highlight is PKG's P/B ratio of 3.65. The P/B ratio is used to compare a stock's market value with 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 8.17. Over the past 12 months, PKG's P/B has been as high as 3.66 and as low as 2.96, with a median of 3.39.
Finally, investors will want to recognize that PKG has a P/CF ratio of 10.93. 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 stock's P/CF looks attractive against its industry's average P/CF of 20.06. Within the past 12 months, PKG's P/CF has been as high as 10.96 and as low as 7.74, with a median of 8.67.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Packaging Corporation of America is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PKG feels like a great value stock at the moment.
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Packaging Corporation of America (PKG) : Free Stock Analysis Report
