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

Investors interested in Building Products - Home Builders stocks are likely familiar with Taylor Morrison Home (TMHC) and NVR (NVR). But which of these two stocks is more attractive to value investors? We'll need to take a closer look to find out.

Everyone has their own methods for finding great value opportunities, but our model includes pairing an impressive grade in the Value category of our Style Scores system with a strong Zacks Rank. The proven Zacks Rank emphasizes companies with positive estimate revision trends, and our Style Scores highlight stocks with specific traits.

Right now, Taylor Morrison Home is sporting a Zacks Rank of #2 (Buy), while NVR has a Zacks Rank of #4 (Sell). This means that TMHC's earnings estimate revision activity has been more impressive, so investors should feel comfortable with its improving analyst outlook. However, value investors will care about much more than just this.

Value investors analyze a variety of traditional, tried-and-true metrics to help find companies that they believe are undervalued at their 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.

TMHC currently has a forward P/E ratio of 6.81, while NVR has a forward P/E of 13.99. We also note that TMHC has a PEG ratio of 0.71. 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. NVR currently has a PEG ratio of 1.

Another notable valuation metric for TMHC is its P/B ratio of 0.85. 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 5.44.

These metrics, and several others, help TMHC earn a Value grade of A, while NVR has been given a Value grade of C.

TMHC stands above NVR thanks to its solid earnings outlook, and based on these valuation figures, we also feel that TMHC is the superior value option right now.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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