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Are Investors Undervaluing Patterson Companies (PDCO) Right Now?

While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.

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.

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 Companies (PDCO). PDCO is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 11.14, which compares to its industry's average of 17.62. Over the past 52 weeks, PDCO's Forward P/E has been as high as 14.07 and as low as 10.21, with a median of 11.83.

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Investors should also recognize that PDCO has a P/B ratio of 2.32. The P/B ratio pits a stock's market value against 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 6.50. Over the past 12 months, PDCO's P/B has been as high as 2.98 and as low as 2.25, with a median of 2.59.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. Some people prefer this metric because sales are harder to manipulate on an income statement. This means it could be a truer performance indicator. PDCO has a P/S ratio of 0.4. This compares to its industry's average P/S of 0.92.

Finally, investors will want to recognize that PDCO has a P/CF ratio of 9.19. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. PDCO's P/CF compares to its industry's average P/CF of 21.12. PDCO's P/CF has been as high as 11.14 and as low as 8.53, with a median of 9.68, all within the past year.

These are only a few of the key metrics included in Patterson Companies'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, PDCO looks like an impressive value stock at the moment.

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