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PHM vs. NVR: Which Stock Is the Better Value Option?

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Investors with an interest in Building Products - Home Builders stocks have likely encountered both PulteGroup (PHM - Free Report) and NVR (NVR - Free Report) . But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

PulteGroup and NVR are both sporting a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is only part of the picture for value investors.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their current share price levels.

The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.

PHM currently has a forward P/E ratio of 9.40, while NVR has a forward P/E of 16.72. We also note that PHM has a PEG ratio of 1.39. 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. NVR currently has a PEG ratio of 1.56.

Another notable valuation metric for PHM is its P/B ratio of 1.79. 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, NVR has a P/B of 6.32.

These are just a few of the metrics contributing to PHM's Value grade of B and NVR's Value grade of C.

Both PHM and NVR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that PHM is the superior value option right now.


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PulteGroup, Inc. (PHM) - free report >>

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