Are Investors Undervaluing Beazer Homes USA (BZH) Right Now?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.
In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.
One stock to keep an eye on is Beazer Homes USA (BZH). BZH is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 6.29 right now. For comparison, its industry sports an average P/E of 9.80. Over the past 52 weeks, BZH's Forward P/E has been as high as 6.69 and as low as 1.61, with a median of 3.71.
Another valuation metric that we should highlight is BZH's P/B ratio of 0.86. 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. This stock's P/B looks solid versus its industry's average P/B of 1.36. Within the past 52 weeks, BZH's P/B has been as high as 0.89 and as low as 0.32, with a median of 0.49.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BZH has a P/S ratio of 0.38. This compares to its industry's average P/S of 0.74.
Finally, investors will want to recognize that BZH has a P/CF ratio of 3.92. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.28. Over the past year, BZH's P/CF has been as high as 4.06 and as low as 1.27, with a median of 2.08.
If you're looking for another solid Building Products - Home Builders value stock, take a look at Toll Brothers (TOL). TOL is a # 1 (Strong Buy) stock with a Value score of A.
Toll Brothers is currently trading with a Forward P/E ratio of 7.32 while its PEG ratio sits at 0.67. Both of the company's metrics compare favorably to its industry's average P/E of 9.80 and average PEG ratio of 0.78.
TOL's Forward P/E has been as high as 8.19 and as low as 4.34, with a median of 6.82. During the same time period, its PEG ratio has been as high as 0.90, as low as 0.62, with a median of 0.68.
Furthermore, Toll Brothers holds a P/B ratio of 1.32 and its industry's price-to-book ratio is 1.36. TOL's P/B has been as high as 1.36, as low as 0.78, with a median of 1.03 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that Beazer Homes USA and Toll Brothers are likely undervalued currently. And when considering the strength of its earnings outlook, BZH and TOL sticks out as one of the market's strongest value stocks.
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Beazer Homes USA, Inc. (BZH) : Free Stock Analysis Report
Toll Brothers Inc. (TOL) : Free Stock Analysis Report
