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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company to watch right now is KB Home (KBH - Free Report) . KBH is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.01. This compares to its industry's average Forward P/E of 10.82. Over the past year, KBH's Forward P/E has been as high as 9.71 and as low as 2.68, with a median of 5.44.
Another notable valuation metric for KBH is its P/B ratio of 1.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.51. Over the past 12 months, KBH's P/B has been as high as 1.16 and as low as 0.63, with a median of 0.82.
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. KBH has a P/S ratio of 0.63. This compares to its industry's average P/S of 0.82.
Finally, investors should note that KBH has a P/CF ratio of 5.60. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.95. Within the past 12 months, KBH's P/CF has been as high as 5.60 and as low as 2.80, with a median of 3.77.
Meritage Homes (MTH - Free Report) may be another strong Building Products - Home Builders stock to add to your shortlist. MTH is a # 2 (Buy) stock with a Value grade of A.
Meritage Homes sports a P/B ratio of 1.30 as well; this compares to its industry's price-to-book ratio of 1.51. In the past 52 weeks, MTH's P/B has been as high as 1.30, as low as 0.66, with a median of 0.94.
These are only a few of the key metrics included in KB Home and Meritage Homes strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, KBH and MTH look like an impressive value stock at the moment.
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Should Value Investors Buy KB Home (KBH) Stock?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 company to watch right now is KB Home (KBH - Free Report) . KBH is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock has a Forward P/E ratio of 8.01. This compares to its industry's average Forward P/E of 10.82. Over the past year, KBH's Forward P/E has been as high as 9.71 and as low as 2.68, with a median of 5.44.
Another notable valuation metric for KBH is its P/B ratio of 1.16. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.51. Over the past 12 months, KBH's P/B has been as high as 1.16 and as low as 0.63, with a median of 0.82.
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. KBH has a P/S ratio of 0.63. This compares to its industry's average P/S of 0.82.
Finally, investors should note that KBH has a P/CF ratio of 5.60. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.95. Within the past 12 months, KBH's P/CF has been as high as 5.60 and as low as 2.80, with a median of 3.77.
Meritage Homes (MTH - Free Report) may be another strong Building Products - Home Builders stock to add to your shortlist. MTH is a # 2 (Buy) stock with a Value grade of A.
Meritage Homes sports a P/B ratio of 1.30 as well; this compares to its industry's price-to-book ratio of 1.51. In the past 52 weeks, MTH's P/B has been as high as 1.30, as low as 0.66, with a median of 0.94.
These are only a few of the key metrics included in KB Home and Meritage Homes strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, KBH and MTH look like an impressive value stock at the moment.