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Are Investors Undervaluing PulteGroup (PHM) Right Now?

Zacks Equity Research
·2-min read

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors use fundamental analysis and traditional valuation metrics to find stocks that they believe are being undervalued by the market at large.

Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.

One company to watch right now is PulteGroup (PHM). PHM 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 7.53, while its industry has an average P/E of 11.51. Over the past year, PHM's Forward P/E has been as high as 13.12 and as low as 4.24, with a median of 10.21.

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Finally, our model also underscores that PHM has a P/CF ratio of 8.53. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 8.76. Within the past 12 months, PHM's P/CF has been as high as 11.91 and as low as 4.50, with a median of 8.55.

These are only a few of the key metrics included in PulteGroup's strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, PHM looks like an impressive value stock at the moment.


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Zacks Investment Research