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PHM or NVR: Which Is the Better Value Stock Right Now?

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Investors looking for stocks in the Building Products - Home Builders sector might want to consider either PulteGroup (PHM - Free Report) or NVR (NVR - Free Report) . But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.

PulteGroup and NVR are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that PHM is likely seeing its earnings outlook improve to a greater extent. But this is just one factor that value investors are interested in.

Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.

Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.

PHM currently has a forward P/E ratio of 9.21, while NVR has a forward P/E of 17.02. We also note that PHM has a PEG ratio of 0.48. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NVR currently has a PEG ratio of 2.24.

Another notable valuation metric for PHM is its P/B ratio of 2.27. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVR has a P/B of 6.45.

These metrics, and several others, help PHM earn a Value grade of A, while NVR has been given a Value grade of C.

PHM sticks out from NVR in both our Zacks Rank and Style Scores models, so value investors will likely feel that PHM is the better option right now.


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PulteGroup, Inc. (PHM) - free report >>

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