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TPH vs. NVR: Which Stock Should Value Investors Buy Now?
Investors interested in stocks from the Building Products - Home Builders sector have probably already heard of Tri Pointe Homes (TPH - Free Report) and NVR (NVR - Free Report) . But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.
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 proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.
Tri Pointe Homes has a Zacks Rank of #2 (Buy), while NVR has a Zacks Rank of #3 (Hold) right now. The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that TPH has an improving earnings outlook. But this is just one factor that value investors are interested in.
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.
Our Value category highlights undervalued companies by looking at a variety of key metrics, including the popular P/E ratio, as well as the P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that have been used by value investors for years.
TPH currently has a forward P/E ratio of 6.33, while NVR has a forward P/E of 15.61. We also note that TPH has a PEG ratio of 0.49. 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 3.67.
Another notable valuation metric for TPH is its P/B ratio of 0.80. 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. By comparison, NVR has a P/B of 5.35.
These metrics, and several others, help TPH earn a Value grade of A, while NVR has been given a Value grade of C.
TPH sticks out from NVR in both our Zacks Rank and Style Scores models, so value investors will likely feel that TPH is the better option right now.