Editor's Note: TheStreet ratings do not represent the views of TheStreet's staff or its contributors. Ratings are established by computer based on metrics for performance (which includes growth, stock performance, efficiency and valuation) and risk (volatility and solvency). Companies with poor cash flow or high debt levels tend to earn lower ratings in our model NEW YORK ( TheStreet) -- Meritage Homes Corporation (NYSE: MTH) has been upgraded by TheStreet Ratings from hold to buy. The company's strengths can be seen in multiple areas, such as its revenue growth, solid stock price performance, growth in earnings per share and increase in net income. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated.
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- The revenue growth greatly exceeded the industry average of 28.6%. Since the same quarter one year prior, revenues rose by 28.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 1100.00% and other important driving factors, this stock has surged by 96.10% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, MTH should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
- MERITAGE HOMES CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, MERITAGE HOMES CORP swung to a loss, reporting -$0.65 versus $0.22 in the prior year. This year, the market expects an improvement in earnings ($0.88 versus -$0.65).
- The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Household Durables industry average, but is greater than that of the S&P 500. The net income increased by 1324.4% when compared to the same quarter one year prior, rising from $0.56 million to $8.01 million.
- The gross profit margin for MERITAGE HOMES CORP is rather low; currently it is at 19.00%. Regardless of MTH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, the net profit margin of 2.80% trails the industry average.
-- Written by a member of TheStreet Ratings Staff