MTH
Meritage Homes Corporation
$58.25
Cyclical & Capital-Intensive
80%
Normalized Earnings × Cycle Multiple
Strong
·
Conviction
Undervalued
Trading 67.5% below fair value
You pay
$58.25
Bear
$139.58
Fair
$179.46
Bull
$219.34
Bear
$139.58
+139.6%
$9.97 × 14x
Fair
$179.46
+208.1%
$9.97 × 18x
Bull
$219.34
+276.5%
$9.97 × 22x
Adjust Assumptions
18.0x
9.97$
Key Value Driver
Through-cycle normalized EPS ($9.97)
Implied Market Multiple
5.8x
Analyst Consensus (External Reference)
Never blended into the bear/base/bull estimates above.
Average Target (38 analysts)
$76.75
Divergence from AlphaVal
134%
Summary
Using 7-year normalized EPS of $9.97 at a 18x cycle multiple, the base-case value is $179.46 per share. P/TBV cross-check: 0.8x.
Warnings
Wall Street's average price target is $76.75 (from 38 analysts). Our estimate is 134% above the consensus -- consider that gap carefully.
Key Risks
- Standard 10-year DCF produces unreliable terminal values for cyclicals
- 'Cheap' P/E at cycle peak is the most common value trap — normalize first
- Captive finance subsidiaries have different risk profiles from manufacturing