Should Value Investors Buy Tri Pointe Homes (TPH) Stock?
Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.
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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One stock to keep an eye on is Tri Pointe Homes (TPH). TPH is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock is trading with a P/E ratio of 6.93, which compares to its industry's average of 8.88. Over the last 12 months, TPH's Forward P/E has been as high as 6.96 and as low as 2.67, with a median of 3.97.
Investors should also note that TPH holds a PEG ratio of 0.53. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. TPH's industry has an average PEG of 0.63 right now. Within the past year, TPH's PEG has been as high as 0.54 and as low as 0.48, with a median of 0.52.
Investors should also recognize that TPH has a P/B ratio of 0.89. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.13. Within the past 52 weeks, TPH's P/B has been as high as 1.05 and as low as 0.57, with a median of 0.76.
Finally, we should also recognize that TPH has a P/CF ratio of 4.14. 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. TPH's current P/CF looks attractive when compared to its industry's average P/CF of 5.05. Within the past 12 months, TPH's P/CF has been as high as 4.92 and as low as 2.66, with a median of 3.45.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Tri Pointe Homes is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TPH feels like a great value stock at the moment.
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Tri Pointe Homes Inc. (TPH) : Free Stock Analysis Report
