Should value investors buy MDC shares (MDC)?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Still, we know that each of our readers has their own perspective, so we always monitor the latest trends in value, growth and momentum to find strong picks.

Given these trends, value investing is clearly one of the most popular methods for finding strong stocks in any market. Value investors use tried-and-tested metrics and fundamental analysis to find companies they believe are undervalued at their current share price levels.

Zacks has developed the innovative Style Scores system to highlight stocks with specific characteristics. For example, value investors will be interested in stocks with excellent grades in the Value category. When combined with a high Zacks Rank, “A” grades in the Value category are among the strongest value stocks on the market today.

MDC (MDC) is a stock that is currently being watched by many investors. MDC currently has a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a P/E ratio of 3.63, while the industry average is 4.94. Over the past year, MDC’s Forward P/E has been as high as 8.74 and as low as 3.62, with a median of 5.58.

Another important valuation metric for MDC is its P/B ratio of 1.06. The P/B ratio is used to compare the market value of a stock to its book value, which is defined as total assets minus total liabilities. MDC’s current P/B looks attractive when compared to the industry average of 1.19. Over the past year, MDC’s P/B has ranged from 1.97 to 1.06, with the median being 1.51.

Value investors also often use the P/S ratio. This metric is determined by dividing the stock price by the company’s revenue. This is a preferred metric because revenue can’t really be manipulated and thus sales are often a more reliable indicator of performance. MDC has a P/S ratio of 0.51. In comparison, its industry’s average P/S ratio is 0.57.

Finally, our model also highlights that MDC has a P/CF ratio of 4.73. This number shows a company’s operating cash flow and can be used to find companies that are undervalued when considering their impressive cash outlook. MDC’s P/CF compares to its industry’s average P/CF of 5.12. MDC’s P/CF has been as high as 10.70 and 4.72 over the past year, with a median of 6.63.

Value investors will likely look at more than just these metrics, but the data above shows that MDC is likely undervalued right now. And when you consider the strength of its earnings outlook, MDC stands out as one of the strongest value stocks on the market.

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