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Are These Construction Stocks Undervalued Right Now?

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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 rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.

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 Lennar (LEN). LEN is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock holds a P/E ratio of 7.40, while its industry has an average P/E of 9.37. Over the last 12 months, LEN's Forward P/E has been as high as 10.92 and as low as 6.28, with a median of 7.82.

Finally, we should also recognize that LEN has a P/CF ratio of 7.76. This metric takes into account a company's operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock's P/CF looks attractive against its industry's average P/CF of 9.42. LEN's P/CF has been as high as 11.61 and as low as 6.72, with a median of 8.94, all within the past year.

Taylor Morrison Home (TMHC) may be another strong Building Products - Home Builders stock to add to your shortlist. TMHC is a # 2 (Buy) stock with a Value grade of A.

Taylor Morrison Home also has a P/B ratio of 1.15 compared to its industry's price-to-book ratio of 1.70. Over the past year, its P/B ratio has been as high as 1.16, as low as 0.78, with a median of 1.

These are only a few of the key metrics included in Lennar and Taylor Morrison Home strong Value grade, but they help show that the stocks are likely undervalued right now. When factoring in the strength of its earnings outlook, LEN and TMHC look like an impressive value stock at the moment.


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Lennar Corporation (LEN) : Free Stock Analysis Report
 
Taylor Morrison Home Corporation (TMHC) : Free Stock Analysis Report
 
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