Meritage Homes Corporation Stock Upgraded (MTH)

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 robust revenue growth, solid stock price performance, compelling growth in net income, impressive record of earnings per share growth and notable return on equity. 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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Highlights from the ratings report include:
  • MTH's very impressive revenue growth greatly exceeded the industry average of 26.3%. Since the same quarter one year prior, revenues leaped by 57.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 290.00% and other important driving factors, this stock has surged by 61.22% 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.
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Household Durables industry. The net income increased by 309.7% when compared to the same quarter one year prior, rising from -$3.24 million to $6.78 million.
  • 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 ($0.75 versus -$0.65).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. Compared to other companies in the Household Durables industry and the overall market, MERITAGE HOMES CORP's return on equity significantly trails that of both the industry average and the S&P 500.
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Meritage Homes Corporation engages in designing and building single-family detached homes. It provides various homes under the Meritage Homes and Monterey Homes names for a range of homebuyers, including first-time, move-up, luxury, and active adult buyers. Meritage Homes has a market cap of $1.52 billion and is part of the industrial goods sector and materials & construction industry. Shares are up 12.4% year to date as of the close of trading on Friday.

You can view the full Meritage Homes Ratings Report or get investment ideas from our investment research center.

-- Written by a member of TheStreet Ratings Staff

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.

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