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Should Value Investors Buy Meritage Homes (MTH) Stock?
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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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Meritage Homes (MTH - Free Report) . MTH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 8.59, which compares to its industry's average of 10.36. Over the last 12 months, MTH's Forward P/E has been as high as 9.60 and as low as 3.20, with a median of 7.57.
Another valuation metric that we should highlight is MTH's P/B ratio of 1.24. The P/B ratio pits a stock's market value against 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 1.45. Within the past 52 weeks, MTH's P/B has been as high as 1.32 and as low as 0.66, with a median of 0.95.
Finally, our model also underscores that MTH has a P/CF ratio of 5.51. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 6.68. Over the past year, MTH's P/CF has been as high as 5.84 and as low as 2.47, with a median of 3.67.
Investors could also keep in mind PulteGroup (PHM - Free Report) , an Building Products - Home Builders stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of PulteGroup are currently trading at a forward earnings multiple of 8.36 and a PEG ratio of 0.52 compared to its industry's P/E and PEG ratios of 10.36 and 0.82, respectively.
PHM's price-to-earnings ratio has been as high as 8.99 and as low as 3.66, with a median of 7.22, while its PEG ratio has been as high as 4.10 and as low as 0.44, with a median of 0.53, all within the past year.
Furthermore, PulteGroup holds a P/B ratio of 1.87 and its industry's price-to-book ratio is 1.45. PHM's P/B has been as high as 1.99, as low as 1.02, with a median of 1.33 over the past 12 months.
These are just a handful of the figures considered in Meritage Homes and PulteGroup's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MTH and PHM is an impressive value stock right now.
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Should Value Investors Buy Meritage Homes (MTH) Stock?
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.
Considering these trends, value investing is clearly one of the most preferred ways to find strong stocks in any type of market. Value investors use a variety of methods, including tried-and-true valuation metrics, to find these stocks.
Luckily, Zacks has developed its own Style Scores system in an effort to find stocks with specific traits. Value investors will be interested in the system's "Value" category. Stocks with both "A" grades in the Value category and high Zacks Ranks are among the strongest value stocks on the market right now.
One company to watch right now is Meritage Homes (MTH - Free Report) . MTH is currently sporting a Zacks Rank of #2 (Buy), as well as a Value grade of A. The stock is trading with a P/E ratio of 8.59, which compares to its industry's average of 10.36. Over the last 12 months, MTH's Forward P/E has been as high as 9.60 and as low as 3.20, with a median of 7.57.
Another valuation metric that we should highlight is MTH's P/B ratio of 1.24. The P/B ratio pits a stock's market value against 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 1.45. Within the past 52 weeks, MTH's P/B has been as high as 1.32 and as low as 0.66, with a median of 0.95.
Finally, our model also underscores that MTH has a P/CF ratio of 5.51. 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 company's current P/CF looks solid when compared to its industry's average P/CF of 6.68. Over the past year, MTH's P/CF has been as high as 5.84 and as low as 2.47, with a median of 3.67.
Investors could also keep in mind PulteGroup (PHM - Free Report) , an Building Products - Home Builders stock with a Zacks Rank of # 2 (Buy) and Value grade of A.
Shares of PulteGroup are currently trading at a forward earnings multiple of 8.36 and a PEG ratio of 0.52 compared to its industry's P/E and PEG ratios of 10.36 and 0.82, respectively.
PHM's price-to-earnings ratio has been as high as 8.99 and as low as 3.66, with a median of 7.22, while its PEG ratio has been as high as 4.10 and as low as 0.44, with a median of 0.53, all within the past year.
Furthermore, PulteGroup holds a P/B ratio of 1.87 and its industry's price-to-book ratio is 1.45. PHM's P/B has been as high as 1.99, as low as 1.02, with a median of 1.33 over the past 12 months.
These are just a handful of the figures considered in Meritage Homes and PulteGroup's great Value grade. Still, they help show that the stock is likely being undervalued at the moment. Add this to the strength of its earnings outlook, and we can clearly see that MTH and PHM is an impressive value stock right now.