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Should Value Investors Buy Patterson Cos. (PDCO) Stock?

Zacks Equity Research

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 Patterson Cos. (PDCO). PDCO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 14.66. This compares to its industry's average Forward P/E of 19.47. Over the past year, PDCO's Forward P/E has been as high as 16.31 and as low as 11.42, with a median of 14.20.

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Finally, we should also recognize that PDCO has a P/CF ratio of 14.75. 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. PDCO's P/CF compares to its industry's average P/CF of 37.65. Over the past year, PDCO's P/CF has been as high as 16 and as low as 7.56, with a median of 12.51.

These are just a handful of the figures considered in Patterson Cos.'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 PDCO is an impressive value stock right now.


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Zacks Investment Research