Are These Construction Stocks Undervalued Right Now?

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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 to watch right now is Patrick Industries (PATK). PATK is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock has a Forward P/E ratio of 7.68. This compares to its industry's average Forward P/E of 10.81. Over the past 52 weeks, PATK's Forward P/E has been as high as 15.21 and as low as 7.68, with a median of 10.88.

Another valuation metric that we should highlight is PATK's P/B ratio of 2.61. 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 company's current P/B looks solid when compared to its industry's average P/B of 3.07. Within the past 52 weeks, PATK's P/B has been as high as 3.89 and as low as 2.61, with a median of 3.05.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. PATK has a P/S ratio of 0.48. This compares to its industry's average P/S of 0.64.

Finally, investors will want to recognize that PATK has a P/CF ratio of 5.83. 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. PATK's P/CF compares to its industry's average P/CF of 15.40. Over the past 52 weeks, PATK's P/CF has been as high as 11.96 and as low as 5.83, with a median of 8.93.

Investors could also keep in mind Thor Industries (THO), an Building Products - Mobile Homes and RV Builders stock with a Zacks Rank of # 2 (Buy) and Value grade of A.

Additionally, Thor Industries has a P/B ratio of 1.96 while its industry's price-to-book ratio sits at 3.07. For THO, this valuation metric has been as high as 3.25, as low as 1.91, with a median of 2.29 over the past year.

These figures are just a handful of the metrics value investors tend to look at, but they help show that Patrick Industries and Thor Industries are likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PATK and THO feels like a great value stock at the moment.

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Patrick Industries, Inc. (PATK) : Free Stock Analysis Report
 
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