Yahoo Finance Is Meritage Homes Corporation (NYSE:MTH) Potentially Undervalued?
Meritage Homes Corporation (NYSE:MTH), is not the largest company out there, but it received a lot of attention from a substantial price movement on the NYSE over the last few months, increasing to US$188 at one point, and dropping to the lows of US$150. Some share price movements can give investors a better opportunity to enter into the stock, and potentially buy at a lower price. A question to answer is whether Meritage Homes' current trading price of US$165 reflective of the actual value of the mid-cap? Or is it currently undervalued, providing us with the opportunity to buy? Let’s take a look at Meritage Homes’s outlook and value based on the most recent financial data to see if there are any catalysts for a price change.
See our latest analysis for Meritage Homes
What Is Meritage Homes Worth?
Great news for investors – Meritage Homes is still trading at a fairly cheap price. According to our valuation, the intrinsic value for the stock is $269.81, which is above what the market is valuing the company at the moment. This indicates a potential opportunity to buy low. What’s more interesting is that, Meritage Homes’s share price is quite volatile, which gives us more chances to buy since the share price could sink lower (or rise higher) in the future. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.
Can we expect growth from Meritage Homes?
Future outlook is an important aspect when you’re looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let’s also take a look at the company's future expectations. However, with a negative profit growth of -4.9% expected over the next couple of years, near-term growth certainly doesn’t appear to be a driver for a buy decision for Meritage Homes. This certainty tips the risk-return scale towards higher risk.
What This Means For You
Are you a shareholder? Although MTH is currently undervalued, the adverse prospect of negative growth brings about some degree of risk. We recommend you think about whether you want to increase your portfolio exposure to MTH, or whether diversifying into another stock may be a better move for your total risk and return.
Are you a potential investor? If you’ve been keeping an eye on MTH for a while, but hesitant on making the leap, we recommend you research further into the stock. Given its current undervaluation, now is a great time to make a decision. But keep in mind the risks that come with negative growth prospects in the future.
If you want to dive deeper into Meritage Homes, you'd also look into what risks it is currently facing. Be aware that Meritage Homes is showing 3 warning signs in our investment analysis and 1 of those makes us a bit uncomfortable...
If you are no longer interested in Meritage Homes, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
