DFH or NVR: Which Is the Better Value Stock Right Now?
In This Article:
Investors interested in stocks from the Building Products - Home Builders sector have probably already heard of Dream Finders Homes Inc. (DFH) and NVR (NVR). But which of these two stocks offers value investors a better bang for their buck right now? We'll need to take a closer look.
The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.
Dream Finders Homes Inc. and NVR are sporting Zacks Ranks of #2 (Buy) and #3 (Hold), respectively, right now. This means that DFH's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. But this is only part of the picture for value investors.
Value investors are also interested in a number of tried-and-true valuation metrics that help show when a company is undervalued at its current share price levels.
The Value category of the Style Scores system identifies undervalued companies by looking at a number of key metrics. These include the long-favored P/E ratio, P/S ratio, earnings yield, cash flow per share, and a variety of other fundamentals that help us determine a company's fair value.
DFH currently has a forward P/E ratio of 8.39, while NVR has a forward P/E of 18.25. We also note that DFH has a PEG ratio of 0.68. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. NVR currently has a PEG ratio of 1.94.
Another notable valuation metric for DFH is its P/B ratio of 2.35. Investors use the P/B ratio to look at a stock's market value versus its book value, which is defined as total assets minus total liabilities. By comparison, NVR has a P/B of 6.50.
These are just a few of the metrics contributing to DFH's Value grade of B and NVR's Value grade of C.
DFH sticks out from NVR in both our Zacks Rank and Style Scores models, so value investors will likely feel that DFH is the better option right now.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Dream Finders Homes, Inc. (DFH) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report