An investment research firm says it has identified American Home Mortgage Corp. as an investment opportunity.
Zacks Investment Research Inc. announced today that the Melville, N.Y.-based company made its High Rank Value Profit Track, which highlights shares of companies with price/earnings multiples under 15 and price/book multiples under three. Zacks says this "screen generated a 28.3% return in 2004 and has outperformed the S&P 500 for 4-1/2 consecutive years."
American Home was identified by Zacks as one of four companies with undervalued shares.
The real estate investment trust, which reported a record $13.7 billion in third quarter production, earned $1.09 per share during the period, up from $1.02 the prior year and five percent higher than the consensus estimate, Zacks said. But a low stock price -- shares today were trading at $27.60, off from nearly $41 in July -- has pushed the P/E multiple to 5.63 and the P/B multiple to 0.99.
"Many value investors look for stocks trading at price/earnings multiples below 15 and price/book multiples below 3," Zacks said in the statement. "Combining these valuation measures with a Zacks Rank of #1 ("Strong Buy") or #2 ("Buy") helps to ensure that a stock is truly undervalued."