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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.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. 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.
Tri Pointe Homes (TPH) is a stock many investors are watching right now. TPH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.12, while its industry has an average P/E of 10.91. Over the last 12 months, TPH's Forward P/E has been as high as 11.01 and as low as 6.44, with a median of 9.06.
We also note that TPH holds a PEG ratio of 0.62. 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. TPH's PEG compares to its industry's average PEG of 0.84. Over the last 12 months, TPH's PEG has been as high as 0.87 and as low as 0.50, with a median of 0.70.
Another notable valuation metric for TPH is its P/B ratio of 1.16. The P/B is a method of comparing a stock's market value to its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.84. Over the past 12 months, TPH's P/B has been as high as 1.39 and as low as 0.81, with a median of 1.16.
Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales. This is a popular metric because sales are harder to manipulate on an income statement, so they are often considered a better performance indicator. TPH has a P/S ratio of 0.87. This compares to its industry's average P/S of 1.06.
Finally, we should also recognize that TPH has a P/CF ratio of 7.31. This data point considers a firm's operating cash flow and is frequently used to find companies that are undervalued when considering their solid cash outlook. TPH's P/CF compares to its industry's average P/CF of 10.28. Over the past year, TPH's P/CF has been as high as 9.65 and as low as 5.26, with a median of 8.53.