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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
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.
One company value investors might notice is PulteGroup (PHM - Free Report) . PHM is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 5.79. This compares to its industry's average Forward P/E of 11.20. Over the past year, PHM's Forward P/E has been as high as 12.02 and as low as 4.24, with a median of 9.59.
PHM is also sporting a PEG ratio of 0.60. 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. PHM's PEG compares to its industry's average PEG of 1.14. Over the last 12 months, PHM's PEG has been as high as 1.51 and as low as 0.44, with a median of 1.29.
Another valuation metric that we should highlight is PHM's P/B ratio of 1.20. 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 solid versus its industry's average P/B of 1.38. Over the past 12 months, PHM's P/B has been as high as 2.32 and as low as 0.88, with a median of 1.87.
Finally, investors should note that PHM has a P/CF ratio of 6.14. 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. PHM's P/CF compares to its industry's average P/CF of 9.69. Over the past year, PHM's P/CF has been as high as 11.91 and as low as 4.50, with a median of 9.73.
Value investors will likely look at more than just these metrics, but the above data helps show that PulteGroup is likely undervalued currently. And when considering the strength of its earnings outlook, PHM sticks out at as one of the market's strongest value stocks.