LGIH - Meritage Homes: Coming Growth In Community Count Could Lead To $30 EPS By 2023 - Massively Undervalued

• The housing market has structurally changed due to COVID and years of underbuilding. Price increases should moderate in a healthy way, but the tailwinds will benefit builders for many years.
• Meritage is the only builder offering guidance for a massive growth in community count, guiding for growth of 50% by June 2022. This should translate to industry-leading earnings growth.
• Meritage shares have underperformed the peer group by a wide margin. Meritage's stock price is down 6% from October 2020, while the peer group is up 20-30% on average.
• Looking back at historical charts, readers can see that this industry typically trades in-line with each other. The Alpha opportunity created by Meritage's recent share price underperformance should be massive.
• Using conservative assumptions and guidance Meritage has already provided, it is very reasonable to assume Meritage could earn over $20 a share in FY 2022 and up to $30 a share in FY 2023.
• The stock price is 30-40% undervalued at the level it trades at today using the company's 2021 guidance. If Meritage's near-term results provide clear line of sight to $20-30 of EPS, the stock price should double from the current level.

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