Are Investors Undervaluing Meritage Homes (MTH) Right Now?
While the proven Zacks Rank places an emphasis on earnings estimates and estimate revisions to find strong stocks, we also know that investors tend to develop their own individual strategies. With this in mind, we are always looking at value, growth, and momentum trends to discover great companies.
Of these, value investing is easily one of the most popular ways to find great stocks in any market environment. Value investors rely on traditional forms of analysis on key valuation metrics to find stocks that they believe are undervalued, leaving room for profits.
On top of the Zacks Rank, investors can also look at our innovative Style Scores system to find stocks with specific traits. For example, value investors will want to focus on the "Value" category. Stocks with high Zacks Ranks and "A" grades for Value will be some of the highest-quality value stocks on the market today.
Meritage Homes (MTH) is a stock many investors are watching right now. MTH is currently sporting a Zacks Rank of #1 (Strong Buy), as well as a Value grade of A. The stock holds a P/E ratio of 7.37, while its industry has an average P/E of 8.44. Over the past year, MTH's Forward P/E has been as high as 9.60 and as low as 3.20, with a median of 7.99.
Investors should also recognize that MTH has a P/B ratio of 1.16. 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. This company's current P/B looks solid when compared to its industry's average P/B of 1.34. Within the past 52 weeks, MTH's P/B has been as high as 1.30 and as low as 0.66, with a median of 1.01.
Finally, we should also recognize that MTH has a P/CF ratio of 5.73. This metric focuses on a firm's operating cash flow and is often used to find stocks that are undervalued based on the strength of their cash outlook. This company's current P/CF looks solid when compared to its industry's average P/CF of 6.71. MTH's P/CF has been as high as 6.45 and as low as 2.47, with a median of 3.97, all within the past year.
Another great Building Products - Home Builders stock you could consider is Toll Brothers (TOL), which is a # 2 (Buy) stock with a Value Score of A.
Toll Brothers is trading at a forward earnings multiple of 7.16 at the moment, with a PEG ratio of 0.65. This compares to its industry's average P/E of 8.44 and average PEG ratio of 0.59.
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Meritage Homes Corporation (MTH) : Free Stock Analysis Report
Toll Brothers Inc. (TOL) : Free Stock Analysis Report
