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Investors looking for stocks in the Building Products - Home Builders sector might want to consider either Dream Finders Homes Inc. (DFH) or NVR (NVR). 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 Zacks Rank favors stocks with strong earnings estimate revision trends, and our Style Scores highlight companies with specific traits.
Dream Finders Homes Inc. and NVR are sporting Zacks Ranks of #1 (Strong Buy) and #3 (Hold), respectively, right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that DFH is likely seeing its earnings outlook improve to a greater extent. But this is just one piece of the puzzle for value investors.
Value investors also tend to look at a number of traditional, tried-and-true figures to help them find stocks that they believe are undervalued at their current share price levels.
Our Value category grades stocks based on a number of key metrics, including the tried-and-true P/E ratio, the P/S ratio, earnings yield, and cash flow per share, as well as a variety of other fundamentals that value investors frequently use.
DFH currently has a forward P/E ratio of 9.61, while NVR has a forward P/E of 18.30. We also note that DFH has a PEG ratio of 0.77. This metric is used similarly to the famous P/E ratio, but the PEG ratio also takes into account the stock's expected earnings growth rate. NVR currently has a PEG ratio of 1.94.
Another notable valuation metric for DFH is its P/B ratio of 2.69. 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. For comparison, NVR has a P/B of 6.52.
Based on these metrics and many more, DFH holds a Value grade of B, while NVR has a Value grade of C.
DFH stands above NVR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that DFH is the superior value option right now.
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Dream Finders Homes, Inc. (DFH) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report