Should Value Investors Buy Forestar Group (FOR) Stock?
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…
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.Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. 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 to watch right now is Forestar Group (FOR - Free Report) . FOR is currently sporting a Zacks Rank of #1 (Strong Buy) and an A for Value.
The stock is trading with a P/E ratio of 5.66, which compares to its industry's average of 7.66. Over the past 52 weeks, FOR's Forward P/E has been as high as 6.64 and as low as 3.21, with a median of 4.66.Another valuation metric that we should highlight is FOR's P/B ratio of 0.64. 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 company's current P/B looks solid when compared to its industry's average P/B of 1.05. Within the past 52 weeks, FOR's P/B has been as high as 1.06 and as low as 0.43, with a median of 0.65.Value investors also use the P/S ratio. The P/S ratio is is calculated as price divided by sales.
This is a prefered metric because revenue can't really be manipulated, so sales are often a truer performance indicator. FOR has a P/S ratio of 0.5. This compares to its industry's average P/S of 1.01.Finally, our model also underscores that FOR has a P/CF ratio of 4.22.
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 8.28. FOR's P/CF has been as high as 9.57 and as low as 2.87, with a median of 4.52, all within the past year.These are just a handful of the figures considered in Forestar Group's great Value grade.
Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that FOR is an impressive value stock right now.