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KBH or PSMMY: 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 KB Home (KBH - Free Report) or Persimmon Plc (PSMMY - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

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 favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

KB Home and Persimmon Plc 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 KBH is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.

Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.

KBH currently has a forward P/E ratio of 9.46, while PSMMY has a forward P/E of 20.42. We also note that KBH has a PEG ratio of 0.80. 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. PSMMY currently has a PEG ratio of 1.44.

Another notable valuation metric for KBH is its P/B ratio of 1.49. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. By comparison, PSMMY has a P/B of 1.64.

These are just a few of the metrics contributing to KBH's Value grade of A and PSMMY's Value grade of C.

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


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