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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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 stock to keep an eye on is Taylor Morrison Home (TMHC - Free Report) . TMHC is currently sporting a Zacks Rank of #2 (Buy) and an A for Value. The stock holds a P/E ratio of 8.60, while its industry has an average P/E of 10.91. Over the last 12 months, TMHC's Forward P/E has been as high as 8.69 and as low as 5.30, with a median of 7.30.
Another valuation metric that we should highlight is TMHC's P/B ratio of 1.12. 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. TMHC's current P/B looks attractive when compared to its industry's average P/B of 1.43. Over the past 12 months, TMHC's P/B has been as high as 1.14 and as low as 0.71, with a median of 0.87.
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. TMHC has a P/S ratio of 0.59. This compares to its industry's average P/S of 0.68.
These are just a handful of the figures considered in Taylor Morrison Home's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that TMHC is an impressive value stock right now.