Should Value Investors Buy Taylor Morrison Home (TMHC) 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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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 to watch right now is Taylor Morrison Home (TMHC). TMHC is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 5.14 right now. For comparison, its industry sports an average P/E of 7.04. TMHC's Forward P/E has been as high as 7.55 and as low as 3.24, with a median of 6.14, all within the past year.
Another valuation metric that we should highlight is TMHC's P/B ratio of 0.81. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This stock's P/B looks solid versus its industry's average P/B of 1.19. TMHC's P/B has been as high as 1.11 and as low as 0.61, with a median of 0.87, over the past year.
Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. TMHC has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.64.
Finally, investors will want to recognize that TMHC has a P/CF ratio of 4.02. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. TMHC's current P/CF looks attractive when compared to its industry's average P/CF of 5.99. TMHC's P/CF has been as high as 5.48 and as low as 2.60, with a median of 3.99, all within the past year.
These are only a few of the key metrics included in Taylor Morrison Home's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, TMHC looks like an impressive value stock at the moment.
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Taylor Morrison Home Corporation (TMHC) : Free Stock Analysis Report
