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Are Investors Undervaluing M.D.C. (MDC) Right Now?

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The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

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 to watch right now is M.D.C. (MDC - Free Report) . MDC is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock holds a P/E ratio of 7.99, while its industry has an average P/E of 8.21. Over the past year, MDC's Forward P/E has been as high as 15.53 and as low as 3.47, with a median of 11.46.

Another valuation metric that we should highlight is MDC's P/B ratio of 1.01. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. This stock's P/B looks attractive against its industry's average P/B of 1.33. Over the past year, MDC's P/B has been as high as 1.20 and as low as 0.65, with a median of 0.89.

Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by 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. MDC has a P/S ratio of 0.63. This compares to its industry's average P/S of 0.69.

These are only a few of the key metrics included in M.D.C.'s strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MDC looks like an impressive value stock at the moment.


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