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Should Value Investors Buy PACCAR (PCAR) Stock?

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 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.

One stock to keep an eye on is PACCAR (PCAR). PCAR is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value.

We also note that PCAR holds a PEG ratio of 1.07. 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 2.42 right now. Over the last 12 months, PCAR's PEG has been as high as 1.81 and as low as 1.04, with a median of 1.23.

Investors should also recognize that PCAR has a P/B ratio of 2.37. 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 attractive against its industry's average P/B of 6.13. PCAR's P/B has been as high as 2.93 and as low as 2.20, with a median of 2.55, over the past year.

Finally, investors should note that PCAR has a P/CF ratio of 9.89. 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 19.31. Within the past 12 months, PCAR's P/CF has been as high as 12.21 and as low as 9.15, with a median of 10.79.

These are only a few of the key metrics included in PACCAR's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PCAR looks like an impressive value stock at the moment.


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