Should Value Investors Buy D.R. Horton (DHI) Stock?
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 use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
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 D.R. Horton (DHI). DHI is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 7.78, while its industry has an average P/E of 7.80. DHI's Forward P/E has been as high as 11.57 and as low as 4.15, with a median of 9.77, all within the past year.
Investors should also note that DHI holds a PEG ratio of 0.42. 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. DHI's PEG compares to its industry's average PEG of 0.55. Over the past 52 weeks, DHI's PEG has been as high as 1.14 and as low as 0.42, with a median of 0.66.
Investors could also keep in mind Meritage Homes (MTH), an Building Products - Home Builders stock with a Zacks Rank of # 1 (Strong Buy) and Value grade of A.
Furthermore, Meritage Homes holds a P/B ratio of 1.06 and its industry's price-to-book ratio is 1.29. MTH's P/B has been as high as 1.30, as low as 0.66, with a median of 1.05 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that D.R. Horton and Meritage Homes are likely undervalued currently. And when considering the strength of its earnings outlook, DHI and MTH sticks out as one of the market's strongest value stocks.
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D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
Meritage Homes Corporation (MTH) : Free Stock Analysis Report
