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While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is KB Home (KBH - Free Report) . KBH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.33. This compares to its industry's average Forward P/E of 9.93. KBH's Forward P/E has been as high as 9.71 and as low as 2.44, with a median of 4.43, all within the past year.
Another valuation metric that we should highlight is KBH's P/B ratio of 1.02. 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 1.20. Over the past year, KBH's P/B has been as high as 1.03 and as low as 0.63, 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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KBH has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.7.
Finally, investors will want to recognize that KBH has a P/CF ratio of 4.65. 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 5.90. KBH's P/CF has been as high as 5 and as low as 2.80, with a median of 3.66, all within the past year.
Another great Building Products - Home Builders stock you could consider is Meritage Homes (MTH - Free Report) , which is a # 1 (Strong Buy) stock with a Value Score of A.
Furthermore, Meritage Homes holds a P/B ratio of 1.10 and its industry's price-to-book ratio is 1.20. MTH's P/B has been as high as 1.15, as low as 0.66, with a median of 0.92 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that KB Home and Meritage Homes are likely undervalued currently. And when considering the strength of its earnings outlook, KBH and MTH sticks out as one of the market's strongest value stocks.
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Should Value Investors Buy KB Home (KBH) Stock?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company value investors might notice is KB Home (KBH - Free Report) . KBH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock has a Forward P/E ratio of 8.33. This compares to its industry's average Forward P/E of 9.93. KBH's Forward P/E has been as high as 9.71 and as low as 2.44, with a median of 4.43, all within the past year.
Another valuation metric that we should highlight is KBH's P/B ratio of 1.02. 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 1.20. Over the past year, KBH's P/B has been as high as 1.03 and as low as 0.63, 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 prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. KBH has a P/S ratio of 0.55. This compares to its industry's average P/S of 0.7.
Finally, investors will want to recognize that KBH has a P/CF ratio of 4.65. 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 5.90. KBH's P/CF has been as high as 5 and as low as 2.80, with a median of 3.66, all within the past year.
Another great Building Products - Home Builders stock you could consider is Meritage Homes (MTH - Free Report) , which is a # 1 (Strong Buy) stock with a Value Score of A.
Furthermore, Meritage Homes holds a P/B ratio of 1.10 and its industry's price-to-book ratio is 1.20. MTH's P/B has been as high as 1.15, as low as 0.66, with a median of 0.92 over the past 12 months.
Value investors will likely look at more than just these metrics, but the above data helps show that KB Home and Meritage Homes are likely undervalued currently. And when considering the strength of its earnings outlook, KBH and MTH sticks out as one of the market's strongest value stocks.