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Should Value Investors Buy Beazer Homes USA (BZH) Stock?

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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 a variety of methods, including tried-and-true valuation metrics, to find these stocks.

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.

Beazer Homes USA (BZH - Free Report) is a stock many investors are watching right now. BZH is currently holding a Zacks Rank of #1 (Strong Buy) and a Value grade of A. The stock is trading with P/E ratio of 5.15 right now. For comparison, its industry sports an average P/E of 9.97. Over the last 12 months, BZH's Forward P/E has been as high as 5.53 and as low as 1.61, with a median of 2.96.

Investors should also recognize that BZH has a P/B ratio of 0.67. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.21. Over the past year, BZH's P/B has been as high as 0.68 and as low as 0.32, with a median of 0.48.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. BZH has a P/S ratio of 0.29. This compares to its industry's average P/S of 0.72.

Finally, investors should note that BZH has a P/CF ratio of 3.06. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. BZH's current P/CF looks attractive when compared to its industry's average P/CF of 5.92. Within the past 12 months, BZH's P/CF has been as high as 3.11 and as low as 1.27, with a median of 2.05.

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


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