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Investors looking for stocks in the Building Products - Home Builders sector might want to consider either Tri Pointe Homes (TPH) or Persimmon Plc (PSMMY). 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 Zacks Rank is a proven strategy that targets companies with positive earnings estimate revision trends, while our Style Scores work to grade companies based on specific traits.
Currently, both Tri Pointe Homes and Persimmon Plc are holding a Zacks Rank of # 2 (Buy). This means that both companies have witnessed positive earnings estimate revisions, so investors should feel comfortable knowing that both of these stocks have an improving earnings outlook. However, value investors will care about much more than just this.
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 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 8.73, while PSMMY has a forward P/E of 19.34. We also note that TPH has a PEG ratio of 0.67. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. PSMMY currently has a PEG ratio of 1.37.
Another notable valuation metric for TPH is its P/B ratio of 1.19. 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, PSMMY has a P/B of 1.55.
These are just a few of the metrics contributing to TPH's Value grade of A and PSMMY's Value grade of C.
Both TPH and PSMMY are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that TPH is the superior value option right now.
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Tri Pointe Homes Inc. (TPH) : Free Stock Analysis Report
Persimmon Plc (PSMMY) : Free Stock Analysis Report