Here at Zacks, our focus is on the proven Zacks Rank system, which emphasizes earnings estimates and estimate revisions to find great stocks. Nevertheless, we are always paying attention to the latest value, growth, and momentum trends to underscore 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 tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.
Zacks has developed the innovative Style Scores system to highlight stocks with specific traits. For example, value investors will be interested in stocks with great grades in the "Value" category. When paired with a high Zacks Rank, "A" grades in the Value category are among the strongest value stocks on the market today.
One company to watch right now is MI Homes (MHO). MHO is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value. The stock has a Forward P/E ratio of 6.77. This compares to its industry's average Forward P/E of 10.19. Over the past year, MHO's Forward P/E has been as high as 8.57 and as low as 4.18, with a median of 6.58.
We should also highlight that MHO has a P/B ratio of 1.30. 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. This stock's P/B looks solid versus its industry's average P/B of 1.58. Over the past 12 months, MHO's P/B has been as high as 1.59 and as low as 0.86, with a median of 1.19.
Value investors also love the P/S ratio, which is calculated by simply dividing a stock's price with the company's sales. This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. MHO has a P/S ratio of 0.87. This compares to its industry's average P/S of 0.99.
Finally, our model also underscores that MHO has a P/CF ratio of 6.88. 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. This company's current P/CF looks solid when compared to its industry's average P/CF of 9.37. Within the past 12 months, MHO's P/CF has been as high as 8.25 and as low as 3.76, with a median of 5.77.
Value investors will likely look at more than just these metrics, but the above data helps show that MI Homes is likely undervalued currently. And when considering the strength of its earnings outlook, MHO sticks out at as one of the market's strongest value stocks.
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