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Is Patrick Industries a Great Stock for Value Investors?
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Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Patrick Industries (PATK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Patrick Industries has a trailing twelve months PE ratio of 18.95, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.35. If we focus on the stock’s long-term PE trend, the current level puts Patrick Industries’ current PE ratio above its midpoint over the past five years, with the number having risen over the past few months.
However, the stock’s PE also compares unfavorably with the Zacks classified Building Products – Miscellaneous sector’s trailing twelve months PE ratio, which stands at 17.63. This indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Patrick Industries has a forward PE ratio (price relative to this year’s earnings) of 17.97, which is tad higher than the current level. So it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Patrick Industries has a P/S ratio of about 0.89. This is significantly lower than the S&P 500 average, which comes in at 3.13 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Patrick Industries currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Patrick Industries a solid choice for value investors.
What About the Stock Overall?
Though Patrick Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives PATK a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past sixty days, while the full year estimate has seen three up in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has dropped by 2.5% in the past two months, while the full year estimate has inched upper by 2.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Notably, the stock has a long term expected earnings growth of 10.05% and holds a Zacks Rank #2 (Buy), signifying probabilities of outperformance in the near term.
Bottom Line
Patrick Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among Bottom 35% of more than 250 industries), it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Building Products - Miscellaneous industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
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Is Patrick Industries a Great Stock for Value Investors?
Value investing is easily one of the most popular ways to find great stocks in any market environment. After all, who wouldn’t want to find stocks that are either flying under the radar and are compelling buys, or offer up tantalizing discounts when compared to fair value?
One way to find these companies is by looking at several key metrics and financial ratios, many of which are crucial in the value stock selection process. Let’s put Patrick Industries (PATK - Free Report) stock into this equation and find out if it is a good choice for value-oriented investors right now, or if investors subscribing to this methodology should look elsewhere for top picks:
PE Ratio
A key metric that value investors always look at is the Price to Earnings Ratio, or PE for short. This shows us how much investors are willing to pay for each dollar of earnings in a given stock, and is easily one of the most popular financial ratios in the world. The best use of the PE ratio is to compare the stock’s current PE ratio with: a) where this ratio has been in the past; b) how it compares to the average for the industry/sector; and c) how it compares to the market as a whole.
On this front, Patrick Industries has a trailing twelve months PE ratio of 18.95, as you can see in the chart below:
This level actually compares pretty favorably with the market at large, as the PE for the S&P 500 compares in at about 20.35. If we focus on the stock’s long-term PE trend, the current level puts Patrick Industries’ current PE ratio above its midpoint over the past five years, with the number having risen over the past few months.
However, the stock’s PE also compares unfavorably with the Zacks classified Building Products – Miscellaneous sector’s trailing twelve months PE ratio, which stands at 17.63. This indicates that the stock is relatively overvalued right now, compared to its peers.
We should also point out that Patrick Industries has a forward PE ratio (price relative to this year’s earnings) of 17.97, which is tad higher than the current level. So it is fair to expect an increase in the company’s share price in the near term.
P/S Ratio
Another key metric to note is the Price/Sales ratio. This approach compares a given stock’s price to its total sales, where a lower reading is generally considered better. Some people like this metric more than other value-focused ones because it looks at sales, something that is far harder to manipulate with accounting tricks than earnings.
Right now, Patrick Industries has a P/S ratio of about 0.89. This is significantly lower than the S&P 500 average, which comes in at 3.13 right now. Also, as we can see in the chart below, this is well below the highs for this stock in particular over the past few years.
Broad Value Outlook
In aggregate, Patrick Industries currently has a Zacks Value Style Score of ‘B’, putting it into the top 40% of all stocks we cover from this look. This makes Patrick Industries a solid choice for value investors.
What About the Stock Overall?
Though Patrick Industries might be a good choice for value investors, there are plenty of other factors to consider before investing in this name. In particular, it is worth noting that the company has a Growth grade of ‘A’ and a Momentum score of ‘C’. This gives PATK a Zacks VGM score—or its overarching fundamental grade—of ‘A’. (You can read more about the Zacks Style Scores here >>)
Meanwhile, the company’s recent earnings estimates have been mixed at best. The current quarter has seen two estimates go lower in the past sixty days, while the full year estimate has seen three up in the same time period.
This has had just a small impact on the consensus estimate though as the current quarter consensus estimate has dropped by 2.5% in the past two months, while the full year estimate has inched upper by 2.2%. You can see the consensus estimate trend and recent price action for the stock in the chart below:
Patrick Industries, Inc. Price and Consensus
Patrick Industries, Inc. Price and Consensus | Patrick Industries, Inc. Quote
Notably, the stock has a long term expected earnings growth of 10.05% and holds a Zacks Rank #2 (Buy), signifying probabilities of outperformance in the near term.
Bottom Line
Patrick Industries is an inspired choice for value investors, as it is hard to beat its incredible lineup of statistics on this front. However, with a sluggish industry rank (among Bottom 35% of more than 250 industries), it is hard to get too excited about this company overall. In fact, over the past two years, the Zacks Building Products - Miscellaneous industry has clearly underperformed the broader market, as you can see below:
So, value investors might want to wait for the broader factors to turn around in this name first, but once that happens, this stock could be a compelling pick.
5 Trades Could Profit ""Big-League"" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course.
Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure. See these buy recommendations now >>