Are Investors Undervaluing PulteGroup (PHM) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 company to watch right now is PulteGroup (PHM). PHM is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with a P/E ratio of 9.32, which compares to its industry's average of 10.21. PHM's Forward P/E has been as high as 10.04 and as low as 5.47, with a median of 7.95, all within the past year.
Finally, we should also recognize that PHM has a P/CF ratio of 8.47. 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. PHM's P/CF compares to its industry's average P/CF of 8.97. Within the past 12 months, PHM's P/CF has been as high as 16.49 and as low as 6.53, with a median of 8.07.
These figures are just a handful of the metrics value investors tend to look at, but they help show that PulteGroup is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PHM feels like a great value stock at the moment.
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