Investors interested in Building Products - Home Builders stocks are likely familiar with Loma Negra Compania Industrial Argentina S.A. Sponsored ADR (LOMA) and NVR (NVR). But which of these two companies is the best option for those looking for undervalued stocks? 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 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.
Currently, Loma Negra Compania Industrial Argentina S.A. Sponsored ADR has a Zacks Rank of #2 (Buy), while NVR has a Zacks Rank of #4 (Sell). This means that LOMA's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.
Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.
LOMA currently has a forward P/E ratio of 5.15, while NVR has a forward P/E of 9.72. We also note that LOMA has a PEG ratio of 0.16. 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 7.53.
Another notable valuation metric for LOMA is its P/B ratio of 1.05. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NVR has a P/B of 4.79.
These are just a few of the metrics contributing to LOMA's Value grade of A and NVR's Value grade of C.
LOMA has seen stronger estimate revision activity and sports more attractive valuation metrics than NVR, so it seems like value investors will conclude that LOMA is the superior option right now.
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