NYSE:MTH appears to be flying under the radar despite its strong fundamentals.

Last update: Jan 29, 2025

Our stock screening tool has pinpointed MERITAGE HOMES CORP (NYSE:MTH) as an undervalued stock option. NYSE:MTH retains a strong financial foundation and an attractive price tag. Let's delve into the specifics below.

Understanding NYSE:MTH's Valuation Score

An integral part of ChartMill's stock analysis is the Valuation Rating, which spans from 0 to 10. This rating evaluates diverse valuation factors, including price to earnings and cash flows, while considering the stock's profitability and growth. NYSE:MTH has received a 8 out of 10:

With a Price/Earnings ratio of 3.66, the valuation of MTH can be described as very cheap.
Compared to the rest of the industry, the Price/Earnings ratio of MTH indicates a rather cheap valuation: MTH is cheaper than 98.46% of the companies listed in the same industry.
MTH is valuated cheaply when we compare the Price/Earnings ratio to 28.42, which is the current average of the S&P500 Index.
With a Price/Forward Earnings ratio of 3.75, the valuation of MTH can be described as very cheap.
Based on the Price/Forward Earnings ratio, MTH is valued cheaply inside the industry as 95.38% of the companies are valued more expensively.
Compared to an average S&P500 Price/Forward Earnings ratio of 24.39, MTH is valued rather cheaply.
Based on the Enterprise Value to EBITDA ratio, MTH is valued cheaply inside the industry as 98.46% of the companies are valued more expensively.
MTH's low PEG Ratio(NY), which compensates the Price/Earnings for growth, indicates a rather cheap valuation of the company.
The excellent profitability rating of MTH may justify a higher PE ratio.

Exploring NYSE:MTH's Profitability

ChartMill assigns a proprietary Profitability Rating to each stock. The score is computed by evaluating various profitability ratios and margins and ranges from 0 to 10. NYSE:MTH was assigned a score of 8 for profitability:

With an excellent Return On Assets value of 11.44%, MTH belongs to the best of the industry, outperforming 84.62% of the companies in the same industry.
Looking at the Return On Equity, with a value of 16.15%, MTH is in the better half of the industry, outperforming 69.23% of the companies in the same industry.
MTH has a better Return On Invested Capital (12.73%) than 73.85% of its industry peers.
MTH had an Average Return On Invested Capital over the past 3 years of 16.78%. This is above the industry average of 11.99%.
The 3 year average ROIC (16.78%) for MTH is well above the current ROIC(12.73%). The reason for the recent decline needs to be investigated.
Looking at the Profit Margin, with a value of 12.63%, MTH belongs to the top of the industry, outperforming 87.69% of the companies in the same industry.
In the last couple of years the Profit Margin of MTH has grown nicely.
With an excellent Operating Margin value of 16.22%, MTH belongs to the best of the industry, outperforming 86.15% of the companies in the same industry.
MTH's Operating Margin has improved in the last couple of years.
MTH's Gross Margin has improved in the last couple of years.

Health Analysis for NYSE:MTH

ChartMill employs its own Health Rating for stock assessment. This rating, ranging from 0 to 10, is calculated by examining various liquidity and solvency ratios. In the case of NYSE:MTH, the assigned 6 reflects its health status:

MTH has an Altman-Z score of 4.20. This indicates that MTH is financially healthy and has little risk of bankruptcy at the moment.
MTH has a Altman-Z score of 4.20. This is in the better half of the industry: MTH outperforms 63.08% of its industry peers.
A Debt/Equity ratio of 0.26 indicates that MTH is not too dependend on debt financing.
MTH has a Current Ratio of 8.81. This indicates that MTH is financially healthy and has no problem in meeting its short term obligations.
MTH has a Current ratio of 8.81. This is amongst the best in the industry. MTH outperforms 92.31% of its industry peers.
With a decent Quick ratio value of 1.63, MTH is doing good in the industry, outperforming 76.92% of the companies in the same industry.

Growth Analysis for NYSE:MTH

Every stock receives a Growth Rating from ChartMill, ranging from 0 to 10. This rating assesses various growth aspects, including historical and projected EPS and revenue growth. NYSE:MTH boasts a 4 out of 10:

MTH shows a strong growth in Earnings Per Share. Measured over the last years, the EPS has been growing by 28.78% yearly.
The Revenue has been growing by 11.71% on average over the past years. This is quite good.

Our Decent Value screener lists more Decent Value stocks and is updated daily.

Check the latest full fundamental report of MTH for a complete fundamental analysis.

Disclaimer

This article should in no way be interpreted as advice. The article is based on the observed metrics at the time of writing, but you should always make your own analysis and trade or invest at your own responsibility.