Is PulteGroup (PHM) Stock Undervalued Right Now?
Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore strong picks.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
One stock to keep an eye on is PulteGroup (PHM). PHM is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with a P/E ratio of 7.93, which compares to its industry's average of 8.31. Over the past 52 weeks, PHM's Forward P/E has been as high as 17.07 and as low as 7.75, with a median of 9.70.
Investors should also note that PHM holds a PEG ratio of 0.41. 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. PHM's PEG compares to its industry's average PEG of 0.55. Within the past year, PHM's PEG has been as high as 1 and as low as 0.40, with a median of 0.51.
Finally, investors will want to recognize that PHM has a P/CF ratio of 10.53. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 13.19. Over the past 52 weeks, PHM's P/CF has been as high as 20.71 and as low as 10.09, with a median of 14.48.
Value investors will likely look at more than just these metrics, but the above data helps show that PulteGroup is likely undervalued currently. And when considering the strength of its earnings outlook, PHM sticks out at as one of the market's strongest value stocks.
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