Patrick Industries, Inc. PATK is a manufacturer and supplier of building products and materials for the recreational vehicle, manufactured housing, kitchen cabinet, office and household furniture, fixtures and commercial furnishings, marine, and other industrial markets. This Zacks Rank #2 (Buy) company has solid prospects and should make a valuable addition to your portfolio. Let us delve deeper into the other factors which make this stock a lucrative pick. Stock Price Movement
Shares of Patrick Industries have returned over 36% in the past one year, comparing favorably with the Building Products - Miscellaneous
industry's gain of 17.3%. That said, we have noticed that the company has outperformed the industry in each of the 4-week, 12-week and 52-week time frames, giving the stock a Momentum Score of 'A'.
Over the past 60 days, Patrick Industries has been seeing an upward trend in earnings estimate revision for 2017 (up 7.2%) and 2018 (up 2.9%). These positive earnings estimate revisions indicate analysts' confidence in the stock and also add to the optimism.
Earnings & Revenue Growth
Patrick Industries makes a great pick in terms of growth investment. Arguably, nothing is more important than earnings growth as surging profit levels are often an indication of strong prospects.
Patrick Industries' 2017 EPS is projected to grow 14.7%, more than the Zacks categorized Building Products - Miscellaneous industry's average EPS growth of 9.4%. Meanwhile, the company's sales growth in 2017 is projected to be about 19%, higher than the industry's growth of 2.4%.
For all of these factors, the company currently has a Growth Score of 'A' on our style score system that helps us identify potential outperformers.
Valuation Looks Rational
Patrick Industries has a Value Style Score of 'B', putting it in the top 40% of all stocks we cover from this perspective.
The company currently has a trailing 12-months Price-to-Earnings (P/E) ratio of 19.47, while the construction sector's average stands slightly higher at 19.56. Moreover, its forward P/E ratio (price compared to this year's earnings) is pegged lower at 18.20. This indicates that a slightly more value-oriented path may be ahead for Patrick Industries.
Looking at the company's sales, the company currently trades at a Price-to-sales (P/S) ratio of 0.92, significantly lower than the industry average of 1.27. Some prefer this metric more than other value-focused ones because sales are harder to manipulate with accounting tricks than earnings.
All these ratios show that the company is undervalued in comparison to its industry peers and thus it a good time to place a bet on the stock.
Return on Equity
Patrick Industries' trailing 12-month return on equity (ROE) supports its growth potential. ROE delivered in the trailing 12 months is 29.4%, while the industry returned 10.6%, reflecting the company's efficient usage of shareholders' funds.
Patrick Industries is a great choice given its incredible statistics from this perspective. Moreover, the company's VGM Score of 'A' coupled with a Zacks Rank #2 makes it a solid investment choice.
Other Stocks to Consider
Other top-ranked stocks in the broader construction sector include Lyon William Homes WLH , M/I Homes, Inc. MHO and KB Home KBH .
M/I Homes sports a Zacks Rank #1 (Strong Buy) and is likely to witness a 36.2% rise in earnings. You can see the complete list of today's Zacks #1 Rank stocks here .
Lyon William, a Zacks Rank #2 stock, is expected to exhibit 38.4% growth in 2017 earnings.
KB Home, a Zacks Rank #2 stock, is likely to witness 43.3% growth in fiscal 2017 earnings.
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Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report KB Home (KBH): Free Stock Analysis Report M/I Homes, Inc. (MHO): Free Stock Analysis Report Lyon William Homes (WLH): Free Stock Analysis Report Patrick Industries, Inc. (PATK): Free Stock Analysis Report To read this article on Zacks.com click here. Zacks Investment Research