Is Meritage Homes Corp. overvalued or undervalued?

As of 17 October 2025, the valuation grade for Meritage Homes Corp. has moved from fair to expensive, indicating a shift towards overvaluation. The company appears overvalued based on its P/E ratio of 6, which is significantly lower than the peer average of 9.16, and its EV to EBITDA ratio of 6.04, which also lags behind peers like Toll Brothers, Inc. at 9.45 and Taylor Morrison Home Corp. at 8.98. Additionally, the Price to Book Value stands at 0.89, suggesting that the market is not valuing the company's assets highly compared to its peers.
In terms of recent performance, Meritage Homes Corp. has seen a 1-week return of 5.41%, outperforming the S&P 500's 1.70%, but it has underperformed over longer periods, with a year-to-date return of -8.80% compared to the S&P 500's 13.30%. Overall, the combination of low valuation ratios and the recent downgrade in valuation grade suggests that Meritage Homes Corp. is currently overvalued relative to its peers and market performance.