Are Investors Undervaluing Meritage Homes (MTH) Right Now?

By Zacks Investment ResearchStock MarketsMar 08, 2020 11:50PM ET

www.investing.com/analysis/are-investors-undervaluing-meritage-homes-mth-right-now-200514546

Are Investors Undervaluing Meritage Homes (MTH) Right Now?

By Zacks Investment Research | Mar 08, 2020 11:50PM ET

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Here at Zacks, we focus on our proven ranking system, which places an emphasis on earnings estimates and estimate revisions, to find winning stocks. But we also understand that investors develop their own strategies, so we are constantly looking at the latest trends in value, growth, and momentum to find strong companies for our readers.

Of these, perhaps no stock market trend is more popular than value investing, which is a strategy that has proven to be successful in all sorts of market environments. Value investors use tried-and-true metrics and fundamental analysis to find companies that they believe are undervalued at their current share price levels.

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 Meritage Homes (MTH). MTH is currently holding a Zacks Rank of #2 (Buy) and a Value grade of A. The stock has a Forward P/E ratio of 9.84. This compares to its industry's average Forward P/E of 11.26. Over the last 12 months, MTH's Forward P/E has been as high as 12.54 and as low as 8.95, with a median of 10.37.

Investors should also note that MTH holds a PEG ratio of 1.10. This popular metric is similar to the widely-known P/E ratio, with the difference being that the PEG ratio also takes into account the company's expected earnings growth rate. MTH's industry has an average PEG of 1.15 right now. Over the last 12 months, MTH's PEG has been as high as 1.53 and as low as 0.70, with a median of 1.12.

Another valuation metric that we should highlight is MTH's P/B ratio of 1.34. The P/B ratio is used to compare a stock's market value with its book value, which is defined as total assets minus total liabilities. MTH's current P/B looks attractive when compared to its industry's average P/B of 1.38. Within the past 52 weeks, MTH's P/B has been as high as 1.56 and as low as 0.97, with a median of 1.30.

Value investors will likely look at more than just these metrics, but the above data helps show that Meritage Homes is likely undervalued currently. And when considering the strength of its earnings outlook, MTH sticks out at as one of the market's strongest value stocks.

Meritage Homes Corporation (MTH): Free Stock Analysis Report

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Zacks Investment Research

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Are Investors Undervaluing Meritage Homes (MTH) Right Now?

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