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Is TopBuild (BLD) Stock Undervalued Right Now?

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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.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader market. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system's "Value" category. Stocks with "A" grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

One company to watch right now is TopBuild (BLD - Free Report) . BLD is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 9.49, while its industry has an average P/E of 11.11. Over the past 52 weeks, BLD's Forward P/E has been as high as 25.73 and as low as 9.11, with a median of 13.10.

Another notable valuation metric for BLD is its P/B ratio of 2.55. 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 3. Over the past 12 months, BLD's P/B has been as high as 5.91 and as low as 2.47, with a median of 3.75.

Value investors also frequently use the P/S ratio. This metric is found by dividing a stock's price with the company's revenue. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. BLD has a P/S ratio of 0.99. This compares to its industry's average P/S of 1.02.

Finally, we should also recognize that BLD has a P/CF ratio of 7.69. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 13.84. Over the past 52 weeks, BLD's P/CF has been as high as 24.14 and as low as 7.45, with a median of 13.17.

Value investors will likely look at more than just these metrics, but the above data helps show that TopBuild is likely undervalued currently. And when considering the strength of its earnings outlook, BLD sticks out at as one of the market's strongest value stocks.


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