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TPH or NVR: Which Is the Better Value Stock Right Now?
Investors interested in Building Products - Home Builders stocks are likely familiar with Tri Pointe Homes (TPH - Free Report) and NVR (NVR - Free Report) . But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.
There are plenty of strategies for discovering value stocks, but we have found that pairing a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system produces the best returns. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Tri Pointe Homes and NVR are both sporting a Zacks Rank of # 2 (Buy) right now. Investors should feel comfortable knowing that both of these stocks have an improving earnings outlook since the Zacks Rank favors companies that have witnessed positive analyst estimate revisions. But this is just one factor that value investors are interested in.
Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its current share price levels.
The Style Score Value grade factors in a variety of key fundamental metrics, including the popular P/E ratio, P/S ratio, earnings yield, cash flow per share, and a number of other key stats that are commonly used by value investors.
TPH currently has a forward P/E ratio of 12.59, while NVR has a forward P/E of 17.13. We also note that TPH has a PEG ratio of 1.14. This figure is similar to the commonly-used P/E ratio, with the PEG ratio also factoring in a company's expected earnings growth rate. NVR currently has a PEG ratio of 1.57.
Another notable valuation metric for TPH is its P/B ratio of 1.06. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVR has a P/B of 5.61.
Based on these metrics and many more, TPH holds a Value grade of A, while NVR has a Value grade of C.
Both TPH and NVR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TPH is the superior value option right now.