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Are Investors Undervaluing Tri Pointe Homes (TPH) Right Now?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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 stock to keep an eye on is Tri Pointe Homes (TPH - Free Report) . TPH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 6.51. This compares to its industry's average Forward P/E of 10.02. Over the last 12 months, TPH's Forward P/E has been as high as 6.90 and as low as 2.67, with a median of 3.97.
Investors will also notice that TPH has a PEG ratio of 0.50. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. TPH's industry currently sports an average PEG of 0.87. Over the past 52 weeks, TPH's PEG has been as high as 0.50 and as low as 0.48, with a median of 0.49.
Investors should also recognize that TPH has a P/B ratio of 0.83. 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. TPH's current P/B looks attractive when compared to its industry's average P/B of 1.18. Over the past 12 months, TPH's P/B has been as high as 1.10 and as low as 0.57, with a median of 0.76.
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. TPH has a P/S ratio of 0.53. This compares to its industry's average P/S of 0.56.
Finally, we should also recognize that TPH has a P/CF ratio of 3.87. 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. TPH's P/CF compares to its industry's average P/CF of 5.06. TPH's P/CF has been as high as 5.16 and as low as 2.66, with a median of 3.45, all within the past year.
These figures are just a handful of the metrics value investors tend to look at, but they help show that Tri Pointe Homes is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, TPH feels like a great value stock at the moment.