Back to top

Image: Bigstock

Is Beazer Homes USA (BZH) Stock Undervalued Right Now?

Read MoreHide Full Article

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 fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 stock to keep an eye on is Beazer Homes USA (BZH - Free Report) . BZH is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock is trading with P/E ratio of 2.54 right now. For comparison, its industry sports an average P/E of 4.52. Over the past year, BZH's Forward P/E has been as high as 7.01 and as low as 2.17, with a median of 4.44.

Investors should also recognize that BZH has a P/B ratio of 0.63. 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 solid versus its industry's average P/B of 1.10. Over the past year, BZH's P/B has been as high as 1.17 and as low as 0.55, with a median of 0.80.

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 popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BZH has a P/S ratio of 0.24. This compares to its industry's average P/S of 0.61.

Finally, investors will want to recognize that BZH has a P/CF ratio of 2.77. 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. BZH's current P/CF looks attractive when compared to its industry's average P/CF of 4.82. BZH's P/CF has been as high as 7.85 and as low as 2.44, with a median of 4.24, all within the past year.

These are only a few of the key metrics included in Beazer Homes USA's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, BZH looks like an impressive value stock at the moment.

In-Depth Zacks Research for the Tickers Above

Normally $25 each - click below to receive one report FREE:

Beazer Homes USA, Inc. (BZH) - free report >>

Published in