Investors with an interest in Building Products - Home Builders stocks have likely encountered both Tri Pointe Homes (TPH) and NVR (NVR). But which of these two stocks presents investors with the better value opportunity right now? Let's take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Tri Pointe Homes has a Zacks Rank of #2 (Buy), while NVR has a Zacks Rank of #3 (Hold) right now. This means that TPH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture 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.
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.
TPH currently has a forward P/E ratio of 9.23, while NVR has a forward P/E of 16.19. We also note that TPH has a PEG ratio of 0.79. 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 1.02.
Another notable valuation metric for TPH is its P/B ratio of 1.33. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVR has a P/B of 7.84.
These metrics, and several others, help TPH earn a Value grade of B, while NVR has been given a Value grade of C.
TPH is currently sporting an improving earnings outlook, which makes it stick out in our Zacks Rank model. And, based on the above valuation metrics, we feel that TPH is likely the superior value option right now.
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TRI Pointe Group, Inc. (TPH) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report
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