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.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One company value investors might notice is PACCAR (PCAR). PCAR is currently sporting a Zacks Rank #2 (Buy), as well as an A grade for Value.
Investors will also notice that PCAR has a PEG ratio of 3.31. 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 industry has an average PEG of 3.94 right now. Over the last 12 months, PCAR's PEG has been as high as 3.40 and as low as 1.12, with a median of 1.74.
Another notable valuation metric for PCAR is its P/B ratio of 2.83. 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 6.36. Over the past year, PCAR's P/B has been as high as 3.37 and as low as 2.52, with a median of 2.92.
Finally, investors will want to recognize that PCAR has a P/CF ratio of 12.52. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. PCAR's P/CF compares to its industry's average P/CF of 34.61. Over the past year, PCAR's P/CF has been as high as 12.80 and as low as 8.17, with a median of 11.36.
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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PACCAR Inc. (PCAR): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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