While Meritage Homes Corporation (NYSE:MTH) might not have the largest market cap around , it saw significant share price movement during recent months on the NYSE, rising to highs of US$214 and falling to the lows of US$152. 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$154 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's The Opportunity In Meritage Homes?

Great news for investors – Meritage Homes is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. In this instance, we’ve used the price-to-earnings (PE) ratio given that there is not enough information to reliably forecast the stock’s cash flows. we find that Meritage Homes’s ratio of 6.86x is below its peer average of 10.87x, which indicates the stock is trading at a lower price compared to the Consumer Durables industry. 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?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. 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 relatively muted profit growth of 2.4% expected over the next couple of years, growth doesn’t seem like a key driver for a buy decision for Meritage Homes, at least in the short term.

What This Means For You

Are you a shareholder? Even though growth is relatively muted, since MTH is currently trading below the industry PE ratio, it may be a great time to accumulate more of your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.

Are you a potential investor? If you’ve been keeping an eye on MTH for a while, now might be the time to enter the stock. Its future profit outlook isn’t fully reflected in the current share price yet, which means it’s not too late to buy MTH. But before you make any investment decisions, consider other factors such as the track record of its management team, in order to make a well-informed assessment.

Keep in mind, when it comes to analysing a stock it's worth noting the risks involved. For instance, we've identified 2 warning signs for Meritage Homes (1 is significant) you should be familiar with.

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.