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Are Investors Undervaluing PACCAR (PCAR) Right Now?

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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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is PACCAR (PCAR - Free Report) . PCAR is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A.

Investors should also note that PCAR holds a PEG ratio of 1.17. 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. PCAR's PEG compares to its industry's average PEG of 2.80. Over the past 52 weeks, PCAR's PEG has been as high as 1.32 and as low as 0.94, with a median of 1.16.

We should also highlight that PCAR has a P/B ratio of 2.96. 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 stock's P/B looks solid versus its industry's average P/B of 4.74. PCAR's P/B has been as high as 3.11 and as low as 2.36, with a median of 2.85, over the past year.

Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. PCAR has a P/S ratio of 1.35. This compares to its industry's average P/S of 2.02.

Finally, we should also recognize that PCAR has a P/CF ratio of 9.95. 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 P/CF compares to its industry's average P/CF of 18.78. PCAR's P/CF has been as high as 11.24 and as low as 8.97, with a median of 9.96, all within the past year.

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.


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