Yahoo Finance PHM vs. NVR: Which Stock Should Value Investors Buy Now?
Investors looking for stocks in the Building Products - Home Builders sector might want to consider either PulteGroup (PHM) or NVR (NVR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Currently, both PulteGroup and NVR are holding a Zacks Rank of # 1 (Strong Buy). This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. 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.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
PHM currently has a forward P/E ratio of 7.28, while NVR has a forward P/E of 13.25. We also note that PHM has a PEG ratio of 0.45. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NVR currently has a PEG ratio of 3.12.
Another notable valuation metric for PHM is its P/B ratio of 1.59. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. For comparison, NVR has a P/B of 4.74.
Based on these metrics and many more, PHM holds a Value grade of B, while NVR has a Value grade of C.
Both PHM and NVR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PHM is the superior value option right now.
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PulteGroup, Inc. (PHM) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report
