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.
Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
PulteGroup (PHM - Free Report) is a stock many investors are watching right now. PHM is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.16. This compares to its industry's average Forward P/E of 7.81. Over the last 12 months, PHM's Forward P/E has been as high as 17.07 and as low as 7.11, with a median of 9.26.
PHM is also sporting a PEG ratio of 0.37. 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. PHM's industry has an average PEG of 0.51 right now. Over the past 52 weeks, PHM's PEG has been as high as 1 and as low as 0.37, with a median of 0.49.
Finally, investors will want to recognize that PHM has a P/CF ratio of 9.73. 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. PHM's current P/CF looks attractive when compared to its industry's average P/CF of 12.43. PHM's P/CF has been as high as 20.71 and as low as 9.65, with a median of 14.48, 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 PulteGroup is likely being undervalued right now. Considering this, as well as the strength of its earnings outlook, PHM feels like a great value stock at the moment.