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This stock looks very good. But.

You have to ask yourself the question: why is the price so low? I looked at the numbers and overall I think they are much stronger than the current price reflects. So I have that suspicious sort of feeling that something isn't right. Maybe you guys can see something in some of the following:

Although MTH had a good one-year sales growth of 31%, the industry had better at 40% sales growth. Income growth over the last year looks even worse: -43% for MTH and 10% for the industry.

Profit margins have been falling four straight years from 30% in 95 to 6.4% today. Currently the industry average is 16.9%. That's a substantial difference.

The EPS estimated growth going forward is 14% for MTH and about the same for the industry.

So I guess the big subject is, where is all of the money going compared to the industry? While they are putting their sales dollars into profit, MTH is not. The obvious answer is that MTH is using the cash to grow the company. But if that were the case, MTH's EPS growth going forward should be better than the industry.

That's my humble analysis and it makes me go hmmmm -- what don't we know about this company? The P/E valuation, however, is staggeringly low compared to the industry, so maybe it is indeed a good value. Is there a good explanation for the low profit margins? If there is, I may be in.


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