DHI vs. NVR: Which Stock Is the Better Value Option?

Investors interested in stocks from the Building Products - Home Builders sector have probably already heard of D.R. Horton (DHI) and NVR (NVR). But which of these two stocks presents investors with the better value opportunity right now? Let's 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 puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

D.R. Horton and NVR are both sporting a Zacks Rank of # 1 (Strong Buy) right now. This system places an emphasis on companies that have seen positive earnings estimate revisions, so investors should feel comfortable knowing that these stocks have improving earnings outlooks. But this is just one factor that value investors are interested in.

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.

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.

DHI currently has a forward P/E ratio of 12.03, while NVR has a forward P/E of 17. We also note that DHI has a PEG ratio of 1.27. 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. NVR currently has a PEG ratio of 6.97.

Another notable valuation metric for DHI is its P/B ratio of 1.88. 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 4.97.

These metrics, and several others, help DHI earn a Value grade of B, while NVR has been given a Value grade of D.

Both DHI and NVR are impressive stocks with solid earnings outlooks, but based on these valuation figures, we feel that DHI is the superior value option right now.

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D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
 
NVR, Inc. (NVR) : Free Stock Analysis Report
 
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