Should Value Investors Buy Taylor Morrison Home (TMHC) Stock?
The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find 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.
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 company value investors might notice is Taylor Morrison Home (TMHC). TMHC is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock holds a P/E ratio of 6.07, while its industry has an average P/E of 8.28. Over the past 52 weeks, TMHC's Forward P/E has been as high as 7.55 and as low as 2.72, with a median of 6.01.
Another notable valuation metric for TMHC is its P/B ratio of 0.95. The P/B ratio is used to compare a stock's market value with 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 1.33. Within the past 52 weeks, TMHC's P/B has been as high as 1.11 and as low as 0.57, with a median of 0.83.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. 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 0.6. This compares to its industry's average P/S of 0.7.
Finally, we should also recognize that TMHC has a P/CF ratio of 4.70. 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. TMHC's P/CF compares to its industry's average P/CF of 6.66. TMHC's P/CF has been as high as 5.48 and as low as 2.44, with a median of 3.61, all within the past year.
Toll Brothers (TOL) may be another strong Building Products - Home Builders stock to add to your shortlist. TOL is a # 1 (Strong Buy) stock with a Value grade of A.
Toll Brothers is currently trading with a Forward P/E ratio of 6.61 while its PEG ratio sits at 0.67. Both of the company's metrics compare favorably to its industry's average P/E of 8.28 and average PEG ratio of 0.59.
TOL's price-to-earnings ratio has been as high as 8.19 and as low as 4.41, with a median of 7.16, while its PEG ratio has been as high as 0.86 and as low as 0.62, with a median of 0.68, all within the past year.
Toll Brothers sports a P/B ratio of 1.26 as well; this compares to its industry's price-to-book ratio of 1.33. In the past 52 weeks, TOL's P/B has been as high as 1.44, as low as 0.78, with a median of 1.05.
Value investors will likely look at more than just these metrics, but the above data helps show that Taylor Morrison Home and Toll Brothers are likely undervalued currently. And when considering the strength of its earnings outlook, TMHC and TOL sticks out as one of the market's strongest value stocks.
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Taylor Morrison Home Corporation (TMHC) : Free Stock Analysis Report
Toll Brothers Inc. (TOL) : Free Stock Analysis Report
