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, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is M/I Homes (MHO - Free Report) . MHO is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 7.30. This compares to its industry's average Forward P/E of 11.05. Over the last 12 months, MHO's Forward P/E has been as high as 13.34 and as low as 1.98, with a median of 8.36.
We should also highlight that MHO has a P/B ratio of 1.18. Investors use the P/B ratio to look at a stock's market value versus 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 1.27. Over the past year, MHO's P/B has been as high as 1.33 and as low as 0.27, with a median of 1.10.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MHO has a P/S ratio of 0.46. This compares to its industry's average P/S of 0.72.
Finally, our model also underscores that MHO has a P/CF ratio of 7.14. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.76. Over the past year, MHO's P/CF has been as high as 9.85 and as low as 1.96, with a median of 7.71.
Value investors will likely look at more than just these metrics, but the above data helps show that M/I Homes is likely undervalued currently. And when considering the strength of its earnings outlook, MHO sticks out at as one of the market's strongest value stocks.