While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
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.
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 value investors might notice is Lennar (LEN). LEN is currently sporting a Zacks Rank of #1 (Strong Buy), as well as an A grade for Value. The stock has a Forward P/E ratio of 7.84. This compares to its industry's average Forward P/E of 8.33. Over the past 52 weeks, LEN's Forward P/E has been as high as 14.03 and as low as 7.84, with a median of 11.10.
Investors will also notice that LEN has a PEG ratio of 0.41. This popular figure is similar to the widely-used P/E ratio, but the PEG ratio also considers a company's expected EPS growth rate. LEN's industry currently sports an average PEG of 0.56. Over the past 52 weeks, LEN's PEG has been as high as 1.38 and as low as 0.41, with a median of 1.01.
Another valuation metric that we should highlight is LEN's P/B ratio of 1.27. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. This company's current P/B looks solid when compared to its industry's average P/B of 1.38. Within the past 52 weeks, LEN's P/B has been as high as 2.16 and as low as 1.22, with a median of 1.62.
Value investors will likely look at more than just these metrics, but the above data helps show that Lennar is likely undervalued currently. And when considering the strength of its earnings outlook, LEN sticks out at as one of the market's strongest value stocks.
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