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LGIH vs. MMI: Which Stock Should Value Investors Buy Now?

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Investors interested in Real Estate - Development stocks are likely familiar with LGI Homes (LGIH - Free Report) and Marcus & Millichap (MMI - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

We have found that the best way to discover great value opportunities is to pair a strong Zacks Rank with a great grade in the Value category of our Style Scores system. The Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.

LGI Homes and Marcus & Millichap are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. Investors should feel comfortable knowing that LGIH likely has seen a stronger improvement to its earnings outlook than MMI has recently. But this is just one piece of the puzzle for value investors.

Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.

The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.

LGIH currently has a forward P/E ratio of 8.74, while MMI has a forward P/E of 19.28. We also note that LGIH has a PEG ratio of 0.79. 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. MMI currently has a PEG ratio of 3.21.

Another notable valuation metric for LGIH is its P/B ratio of 2.33. 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. For comparison, MMI has a P/B of 4.39.

Based on these metrics and many more, LGIH holds a Value grade of B, while MMI has a Value grade of D.

LGIH sticks out from MMI in both our Zacks Rank and Style Scores models, so value investors will likely feel that LGIH is the better option right now.


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Marcus & Millichap, Inc. (MMI) - free report >>

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