Should Value Investors Buy M.D.C. (MDC) Stock?
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 value investors might notice is M.D.C. (MDC). MDC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A.
Investors should also recognize that MDC has a P/B ratio of 0.96. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.25. Within the past 52 weeks, MDC's P/B has been as high as 1.02 and as low as 0.65, with a median of 0.85.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. MDC has a P/S ratio of 0.54. This compares to its industry's average P/S of 0.67.
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.
Additionally, Meritage Homes has a P/B ratio of 1.08 while its industry's price-to-book ratio sits at 1.25. For MTH, this valuation metric has been as high as 1.15, as low as 0.66, with a median of 0.92 over the past year.
Value investors will likely look at more than just these metrics, but the above data helps show that M.D.C. and Meritage Homes are likely undervalued currently. And when considering the strength of its earnings outlook, MDC and MTH sticks out as one of the market's strongest value stocks.
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M.D.C. Holdings, Inc. (MDC) : Free Stock Analysis Report
Meritage Homes Corporation (MTH) : Free Stock Analysis Report
