Are Investors Undervaluing Meritage Homes (MTH) Right Now?

The proven Zacks Rank system focuses on earnings estimates and estimate revisions to find winning stocks. Nevertheless, we know that our readers all have their own perspectives, so we are always looking at the latest trends in value, growth, and momentum to find strong picks.

Looking at the history of these trends, perhaps none is more beloved than value investing. This strategy simply looks to identify companies that are being undervalued by the broader 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.

In addition to the Zacks Rank, investors looking for stocks with specific traits can utilize our Style Scores system. Of course, value investors will be most interested in the system’s “Value” category. Stocks with “A” grades for Value and high Zacks Ranks are among the best value stocks available at any given moment.

Meritage Homes (MTH) is a stock many investors are watching right now. MTH is currently sporting a Zacks Rank of #2 (Buy), as well as an A grade for Value. The stock holds a P/E ratio of 8.76, while its industry has an average P/E of 10.36. Over the last 12 months, MTH’s Forward P/E has been as high as 9.60 and as low as 2.73, with a median of 6.93.

We should also highlight that MTH has a P/B ratio of 1.26. The P/B is a method of comparing a stock’s market value to its book value, which is defined as total assets minus total liabilities. This stock’s P/B looks attractive against its industry’s average P/B of 1.44. Over the past 12 months, MTH’s P/B has been as high as 1.26 and as low as 0.66, with a median of 0.92.

Finally, our model also underscores that MTH has a P/CF ratio of 5.57. This metric takes into account a company’s operating cash flow and can be used to find stocks that are undervalued based on their solid cash outlook. This stock’s P/CF looks attractive against its industry’s average P/CF of 6.59. MTH’s P/CF has been as high as 5.57 and as low as 2.47, with a median of 3.50, all within the past year.

These are only a few of the key metrics included in Meritage Homes’s strong Value grade, but they help show that the stock is likely undervalued right now. When factoring in the strength of its earnings outlook, MTH looks like an impressive value stock at the moment.

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