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Is Paccar (PCAR) Stock Undervalued Right Now?

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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.

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 use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 9.45, while its industry has an average P/E of 10.75. Over the past year, PCAR's Forward P/E has been as high as 17.87 and as low as 8.90, with a median of 11.52.

Investors will also notice that PCAR has a PEG ratio of 0.88. 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 PEG compares to its industry's average PEG of 1.47. Over the last 12 months, PCAR's PEG has been as high as 1.79 and as low as 0.82, with a median of 1.17.

Another valuation metric that we should highlight is PCAR's P/B ratio of 2.25. 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 2.48. PCAR's P/B has been as high as 3.45 and as low as 2.10, with a median of 2.74, over the past year.

Finally, we should also recognize that PCAR has a P/CF ratio of 6.28. 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. PCAR's current P/CF looks attractive when compared to its industry's average P/CF of 6.62. Over the past year, PCAR's P/CF has been as high as 11.90 and as low as 5.86, with a median of 7.69.

These are just a handful of the figures considered in Paccar's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that PCAR is an impressive value stock right now.


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