Back to top

Image: Bigstock

Is PACCAR (PCAR) a Great Value Stock Right Now?

Read MoreHide Full Article

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.

PACCAR (PCAR - Free Report) is a stock many investors are watching right now. PCAR is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A.

Another valuation metric that we should highlight is PCAR's P/B ratio of 2.27. 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 5.12. Within the past 52 weeks, PCAR's P/B has been as high as 2.93 and as low as 2.27, with a median of 2.60.

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 1.16. This compares to its industry's average P/S of 2.45.

Finally, investors should note that PCAR has a P/CF ratio of 9.81. This figure highlights a company's operating cash flow and can be used to find firms that are undervalued when considering their impressive cash outlook. PCAR's P/CF compares to its industry's average P/CF of 15.64. Over the past 52 weeks, PCAR's P/CF has been as high as 12.21 and as low as 9.81, with a median of 10.89.

These figures are just a handful of the metrics value investors tend to look at, but they help show that PACCAR is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PCAR feels like a great value stock at the moment.


See More Zacks Research for These Tickers


Normally $25 each - click below to receive one report FREE:


PACCAR Inc. (PCAR) - free report >>

Published in