Are Investors Undervaluing Precision Drilling (PDS) Right Now?

Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Precision Drilling (PDS) is a stock many investors are watching right now. PDS is currently holding a Zacks Rank #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 10.97, which compares to its industry's average of 22.24. PDS's Forward P/E has been as high as 12.48 and as low as 4.90, with a median of 6.95, all within the past year.

Another notable valuation metric for PDS is its P/B ratio of 0.63. Investors use the P/B ratio to look at a stock's market value versus 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 1.82. Within the past 52 weeks, PDS's P/B has been as high as 0.80 and as low as 0.43, with a median of 0.62.

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. PDS has a P/S ratio of 0.72. This compares to its industry's average P/S of 1.41.

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

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This article originally published on Zacks Investment Research (zacks.com).

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