December 5, 2024
Top 10 Stock Meritage Homes Strong Buy Recommendation
How to read the ranks
For every stock, we judge its performance against its peers and rank it on a scale of 1 to 100. The higher the rank, the better the stock performs than its peers. And, we do this for six investment strategies:
Value - shows how good of a value the stock is. Green is "inexpensive"; red is "expensive".
Growth - shows a company's growth potential. Green is "high growth" expected; red is "tough times ahead".
Safety - relates to the amount of debt a company has. Green is low debt level; red is high debt level.
Combined Financial - this isn't an average of the first three ranks but rather a consolidated view across several financial indicators. Green = good; red = tread carefully.
(NEW) Sentiment - quantifies professional analyst ratings and holdings as well as market pulse. Green = positive sentiment; red = skepticism (Only available to Premium Subscribers).
(NEW) 360° View - the ultimate rating with all financial and non-financial indicators.
Snapshot: Meritage Homes – Top 10 Stock in Customer Satisfaction Leaders in the United States
Meritage Homes is listed as a top 10 stock on December 05, 2024 in the market index Customer Focus US because of its high performance in at least one of the Obermatt investment strategies. While half the consolidated Obermatt Ranks are above-average, investor sentiment is negative and growth performance is below market average, both a sign for caution. Based on the Obermatt 360° View of 97 (top 97% performer), Obermatt assesses an overall strong buy recommendation for Meritage Homes on December 05, 2024.
Snapshot: Obermatt Ranks
| Country | USA |
| Industry | Homebuilding |
| Index | Customer Focus US, Human Rights |
| Size class | X-Large |
When Obermatt identifies the Top 10 stocks in a market, it’s based on a certain investment strategy. The best performing stocks usually aren’t the ones that everyone is talking about (those are often "over-priced" and have low Value ranks).
For each investment strategy, we provide you with more detailed analysis and our recommendation. You see the ranks of the top 10 stocks ranked by that particular investment strategy (360° View, Sentiment, Value, Growth, Safety and Combined Financial Performance).
360° View: Obermatt 360° View Meritage Homes Strong Buy
| 360 METRICS | December 5, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 91 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 53 |
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| SENTIMENT | ||||||||
| SENTIMENT | 29 |
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| 360° VIEW | ||||||||
| 360° VIEW | 97 |
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ANALYSIS: With an Obermatt 360° View of 97 (better than 97% compared with alternatives) for 2022, overall professional sentiment and financial characteristics for the stock Meritage Homes are very positive. The 360° View is based on consolidating four consolidated indicators, with half the metrics below and half above average for Meritage Homes. The consolidated Value Rank has an attractive rank of 91, which means that the share price of Meritage Homes is on the lower side compared with the typical size in indicators such as revenues, profits, and invested capital. This means the stock price is lower than for 91% of alternative stocks in the same industry. The company is also safely financed with a Safety rank of 53. But the professional market sentiment is below average compared with other stock investment alternatives with a Sentiment Rank of 29. Professional investors are more confident in 71% other stocks. The consolidated Growth Rank also has a low rank of 43, which means that the company is below average in terms of growth momentum when looking at financial metrics such as revenue, profit, invested capital growth, and stock returns. 57 of its competitors have better growth. ...read more
RECOMMENDATION: With a consolidated 360° View of 97, Meritage Homes is better positioned than 97% of all alternative stock investment opportunities based on the Obermatt Method. The picture is mixed here. The stock seems to be a good value (Value Rank of 91), and the financing structure is on the safer side (Safety Rank of 53). However, sentiment in the professional investor community is below-average (Sentiment Rank of 29), as is the growth momentum for the company (Growth Rank of 43). Since the company is good value and the share price low, it should attract investors, yet professionals are skeptical. Even though the financing structure is not as important as Value, Growth, and Sentiment, investors should still be careful with this decision and conduct further research if they are serious about investing in this company. ...read more
Sentiment Strategy: Professional Market Sentiment for Meritage Homes only reserved
ANALYSIS: With an Obermatt Sentiment Rank of 29 (better than 29% compared with alternatives), overall professional sentiment and engagement for the stock Meritage Homes is below industry average. The Sentiment Rank is based on consolidating four sentiment indicators, with three out of four metrics below average for Meritage Homes. Analyst Opinions are at a rank of 32 (worse than 68% of alternative investments), which means that currently, stock research analysts tend to warn against investing in the stock of the company. But they are changing their opinions! Analyst Opinions Change has a rank of 78, which means that stock research experts have found something to make them more positive about investing in the company. In other words, they are getting more optimistic of stock investments in Meritage Homes. But the Professional Investors rank is low at 38, which means that professional investors hold less stock in this company than in 62% of alternative investment opportunities. Pros tend to invest in other companies. Market Pulse is also low at a rank of 10, which means that the current professional news and professional social networks tend to be negative when discussing this company (more negative news than for 90% of competitors). ...read more
RECOMMENDATION: With a consolidated Sentiment Rank of 29 (less encouraging than 71% compared with investment alternatives), Meritage Homes has a reputation among professional investors that is below that of its competitors. These are quite a few negative sentiment signals. One may want to trust the analysts that are changing their opinions. They may be early indications of better times, especially if the company is a smaller one. But If they are an extra large company, they should have more professional stockholders than are currently present. ...read more
Value Strategy: Meritage Homes Stock Price Value at the top
ANALYSIS: With an Obermatt Value Rank of 91 (better than 91% compared with alternatives) for 2022, Meritage Homes shares are significantly less expensive than comparable stocks. The Value Rank is based on consolidating four value indicators, with three out of four indicators above average for Meritage Homes. Price-to-Profit (also referred to as price to earnings, P/E ratio) is 83 which means that the stock price compared with what market professionals expect for future profits is lower than for 83% of comparable companies, indicating a good value concerning Meritage Homes's profit levels. The same is valid for the expected Price-to-Book Capital ratio (also referred to as market-to-book ratio) with a Price-to-Capital Rank of 64, and for Dividend Yield with a Dividend Yield Rank of 87. But, compared with other companies in the same industry, the stock price is higher than average as regards expected revenues; only 54% of all competitors have an even higher stock price as regards to sales revenues (a Price-to-Sales Rank of 46). Profits, the level of invested capital, and dividend policy suggest that this stock is attractively priced. ...read more
RECOMMENDATION: The overall picture with a consolidated Value Rank of 91, is a buy recommendation based on Meritage Homes's stock price compared with the company's operational size and dividend yields. Since it is on the expensive side for Price-to-Sales, it may mean that Meritage Homes has pricing power in its distribution market because it can charge higher prices than its competitors. If this is the case, all four value indicators are positive signals for purchasing Meritage Homes shares. ...read more
Growth Strategy: Meritage Homes Growth Momentum low
ANALYSIS: With an Obermatt Growth Rank of 43 (better than 43% compared with alternatives), Meritage Homes shows a below-average growth dynamic in its industry. There is limited momentum in this company. The Growth Rank is based on consolidating four value indicators, with half of the indicators below and half above average for Meritage Homes. Sales Growth has a rank of 81 which means that currently professionals expect the company to grow more than 81% of its competitors. Stock Returns are also above average with a rank of 63. But Capital Growth has only a rank of 21, which means that currently professionals expect the company to grow its invested capital less than 79% of its competitors. Profit Growth is also low, with a rank of only 41, which means that, currently, professionals expect the company to grow its profits below average. ...read more
RECOMMENDATION: The overall picture with a consolidated Growth Rank of 43, is a hold recommendation for growth and momentum investors. This is a surprising picture, as the messages from the operating growth indicators of revenues, profits, and invested capital are mixed, while stock returns are above average. It may indicate new intellectual properties, such as brand improvement or a strong market position that shows in revenues but not in the capital. The low profit-growth rate may indicate an early phase where costs are still high, and revenues don't fully cover upfront investments or fixed costs. The positive investor outlook with a 63% peer outperformance is reaffirmed in this case which may be a good sign for an investment into a well-protected high-growth company. This fact needs to be confirmed by researching the company website and press. ...read more
Safety Strategy: Meritage Homes Debt Financing Safety above-average
| SAFETY METRICS | December 5, 2024 | |||||||
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| LEVERAGE | ||||||||
| LEVERAGE | 64 |
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| REFINANCING | ||||||||
| REFINANCING | 98 |
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| LIQUIDITY | ||||||||
| LIQUIDITY | 80 |
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| CONSOLIDATED RANK: SAFETY | ||||||||
| CONSOLIDATED RANK: SAFETY | 53 |
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ANALYSIS: With an Obermatt Safety Rank of 53 (better than 53% compared with alternatives), the company Meritage Homes has financing practices on the safer side, which mean that their overall debt burden is lower than average. This doesn't mean that the business of Meritage Homes is safe, it only means that the company is on the safer side regarding possible bankruptcy, assuming that public reporting is correct. The Safety Rank is based on consolidating three financing indicators, where all three are above average for Meritage Homes. Leverage is at 64, meaning the company has a below-average debt-to-equity ratio. It has less debt than 64% of its competitors. Refinancing is at a rank of 98, meaning that the portion of the debt about to be refinanced is below average. It has less debt in the refinancing stage than 98% of its competitors. Finally, Liquidity is also good at a rank of 80, which means that the company generates more profit to service its debt than 80% of its competitors. ...read more
RECOMMENDATION: With a consolidated Safety Rank of 53 (better than 53% compared with alternatives), Meritage Homes has a financing structure that is safer than that of its competitors. These three positive financing indicators signal that the company is less likely to default on its debt obligations. However, it also means that its shareholder returns will be more modest if things go well. A low safety means fewer troubles in downtimes and less upside in good times. ...read more
Combined financial peformance: Meritage Homes Below-Average Financial Performance
| COMBINED PERFORMANCE | December 5, 2024 | |||||||
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| VALUE | ||||||||
| VALUE | 91 |
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| GROWTH | ||||||||
| GROWTH | 43 |
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| SAFETY | ||||||||
| SAFETY | 80 |
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| COMBINED | ||||||||
| COMBINED | 26 |
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ANALYSIS: With an Obermatt Combined Rank of 26 (worse than 74% compared with investment alternatives), Meritage Homes (Homebuilding, USA) shares have somewhat below-average financial characteristics compared with similar stocks. Shares of Meritage Homes are a good value (attractively priced) with a consolidated Value Rank of 91 (better than 91% of alternatives), are safely financed (Safety Rank of 53, which means low debt burdens), but show below-average growth (Growth Rank of 43). ...read more
RECOMMENDATION: A Combined Rank of 26, is a hold recommendation based on Meritage Homes's financial characteristics. As the company Meritage Homes's key financial metrics exhibit good value (Obermatt Value Rank of 91) but low growth (Obermatt Growth Rank of 43) while being safely financed (Obermatt Safety Rank of 53), it may be a safer investment because companies with low debt can better withstand times of crises. Yet the good value, better than 91% of comparable companies, may also indicate that the company's future is challenging. If you believe that low growth is temporary or just due to a specific current event, you may conclude that the good value of the stock provides an attractive investment opportunity and the downside is limited due to below-average financing risks. ...read more
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