Investors looking for stocks in the Building Products - Home Builders sector might want to consider either Dream Finders Homes Inc. (DFH) or NVR (NVR). But which of these two companies is the best option for those looking for undervalued stocks? Let's take a closer look.

The best way to find great value stocks is to pair a strong Zacks Rank with an impressive grade in the Value category of our Style Scores system. The proven Zacks Rank puts an emphasis on earnings estimates and estimate revisions, while our Style Scores work to identify stocks with specific traits.

Right now, Dream Finders Homes Inc. is sporting a Zacks Rank of #2 (Buy), while NVR has a Zacks Rank of #3 (Hold). The Zacks Rank favors stocks that have recently seen positive revisions to their earnings estimates, so investors should rest assured that DFH has an improving earnings outlook. But this is just one factor that value investors are interested in.

Value investors also try to analyze a wide range of traditional figures and metrics to help determine whether a company is undervalued at its 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.

DFH currently has a forward P/E ratio of 6.55, while NVR has a forward P/E of 13.29. We also note that DFH has a PEG ratio of 1.18. 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. NVR currently has a PEG ratio of 2.21.

Another notable valuation metric for DFH is its P/B ratio of 1.66. The P/B ratio pits a stock's market value against its book value, which is defined as total assets minus total liabilities. For comparison, NVR has a P/B of 5.18.

These are just a few of the metrics contributing to DFH's Value grade of A and NVR's Value grade of C.

DFH sticks out from NVR in both our Zacks Rank and Style Scores models, so value investors will likely feel that DFH is the better option right now.

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Dream Finders Homes, Inc. (DFH) : Free Stock Analysis Report

NVR, Inc. (NVR) : Free Stock Analysis Report

This article originally published on Zacks Investment Research (zacks.com).

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