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Meritage (MTH)
NYSE:MTH
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Meritage (MTH) AI Stock Analysis

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MTH

Meritage

(NYSE:MTH)

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Neutral 69 (OpenAI - 4o)
Rating:69Neutral
Price Target:
$78.00
▲(16.28% Upside)
Meritage's overall stock score reflects a stable financial position and attractive valuation, offset by bearish technical indicators and challenges highlighted in the earnings call. The company's strong profitability and low P/E ratio are significant strengths, while the negative cash flows and market challenges present risks.
Positive Factors
Community Count Growth
The significant increase in community count enhances Meritage's market presence and potential revenue streams, indicating strategic expansion in high-demand areas.
Strong Backlog Conversion Rate
High backlog conversion rates suggest effective operational execution and strong demand fulfillment, supporting consistent revenue generation.
Healthy Balance Sheet
A strong balance sheet with low leverage provides financial stability and flexibility, enabling strategic investments and resilience in downturns.
Negative Factors
Decreased Revenue and Earnings
Declining revenue and earnings indicate potential challenges in market demand or pricing power, which could impact long-term profitability.
Increased Use of Incentives
Increased reliance on incentives may pressure margins and suggest underlying demand weaknesses, affecting long-term financial health.
Negative Cash Flow
Negative cash flow can limit the company's ability to fund operations and growth initiatives, posing a risk to financial sustainability.

Meritage (MTH) vs. SPDR S&P 500 ETF (SPY)

Meritage Business Overview & Revenue Model

Company DescriptionMeritage (MTH) is a leading homebuilder based in the United States, specializing in the development and construction of single-family homes. The company operates primarily in high-demand markets across the country, focusing on providing innovative and sustainable housing solutions. Meritage is known for its commitment to energy-efficient homebuilding, offering a range of designs that cater to diverse consumer preferences and budgets. In addition to residential construction, the company is involved in land acquisition and development, enhancing its position within the housing sector.
How the Company Makes MoneyMeritage generates revenue primarily through the sale of newly constructed homes. Its revenue model is centered around the construction and delivery of homes to homebuyers, which includes a mix of entry-level, move-up, and luxury homes. Key revenue streams include home sales, as well as ancillary services such as mortgage and title services provided through their in-house subsidiaries. Additionally, the company benefits from strategic partnerships with land developers and suppliers, which help optimize costs and enhance profitability. Factors contributing to its earnings include favorable market conditions, demand for new housing, and the company's focus on energy-efficient building practices that appeal to environmentally conscious consumers.

Meritage Earnings Call Summary

Earnings Call Date:Oct 28, 2025
(Q3-2025)
|
% Change Since: |
Next Earnings Date:Feb 04, 2026
Earnings Call Sentiment Neutral
The earnings call reflected a challenging market environment with reduced revenue, earnings, and margins. Despite these challenges, there were positive aspects such as strong backlog conversion, community count growth, and shareholder returns. However, the significant use of incentives and impairments weigh heavily on the overall sentiment.
Q3-2025 Updates
Positive Updates
Year-over-Year Increase in Orders
Orders grew by 4% year-over-year to 3,636 units despite softer market conditions.
Strong Backlog Conversion Rate
Achieved a 211% backlog conversion rate with 3,685 home deliveries and home closing revenue of $1.4 billion.
Community Count Growth
Reported a 20% year-over-year increase in community count, ending the quarter with 334 communities.
Shareholder Returns
Returned $85 million to shareholders in the third quarter, including $55 million in share repurchases.
Improved Cycle Times
Cycle times improved to approximately 105 calendar days from about 110 days in the previous quarter.
Negative Updates
Decreased Revenue and Earnings
Third quarter home closing revenue decreased by 12% year-over-year, and diluted EPS dropped by 48% from the prior year.
Increased Use of Incentives
Higher incentive usage due to lack of consumer confidence, with incentives impacting margins significantly.
Inventory Impairments and Charges
Recorded $14.5 million in combined real estate inventory impairments and terminated land deal charges.
Lower Gross Margins
Home closing gross margin fell to 19.1%, down from 24.8% in the prior year.
Reduced Starts
Starts were intentionally slowed by 19% year-over-year to align with softer demand and seasonality.
Company Guidance
During the Meritage Homes Third Quarter 2025 Analyst Call, the company provided several key metrics in its financial guidance. They reported a 4% year-over-year increase in orders to 3,636 units and achieved an average absorption pace of 3.8. The company delivered 3,685 homes, resulting in home closing revenue of $1.4 billion. The adjusted gross margin was reported at 20.1%, with an adjusted diluted EPS of $1.55, both in line with their guidance. Meritage Homes increased their book value per share by 8% year-over-year and ended the quarter with 334 communities, marking a 20% increase from the previous year. The company also maintained a strong balance sheet, with a net debt to capital ratio of 17.2% and returned $85 million to shareholders during the quarter. Looking ahead to Q4 2025, Meritage Homes projected home closings between 3,800 and 4,000 units, home closing revenue between $1.46 billion and $1.54 billion, and a gross margin of 19% to 20%, with a diluted EPS range of $1.51 to $1.70.

Meritage Financial Statement Overview

Summary
Meritage shows strong profitability with robust profit margins and a healthy balance sheet. However, challenges in cash flow and declining revenue suggest areas for improvement.
Income Statement
72
Positive
Meritage shows strong gross profit and net profit margins over the TTM, with a gross profit margin of 22.7% and a net profit margin of 13.0%. However, revenue has decreased slightly by 3.1% from the previous year. EBIT and EBITDA margins are robust at 15.7% and 16.5% respectively, indicating efficient cost management.
Balance Sheet
78
Positive
The company maintains a healthy debt-to-equity ratio of 0.34, suggesting prudent leverage use. ROE is solid at 15.3%, although it has declined compared to previous years. The equity ratio of 67.9% highlights a strong equity base relative to assets.
Cash Flow
65
Positive
Cash flow analysis shows a negative free cash flow growth rate, with free cash flow remaining negative in the TTM. The operating cash flow to net income ratio is negative, indicating cash flow challenges despite profitability, which is a concern.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue6.04B6.39B6.14B6.30B5.15B4.51B
Gross Profit1.30B1.60B1.52B1.80B1.44B976.00M
EBITDA728.23M1.03B972.93M1.31B999.59M566.79M
Net Income541.63M786.19M738.75M992.19M737.44M423.48M
Balance Sheet
Total Assets7.76B7.16B6.35B5.77B4.81B3.86B
Cash, Cash Equivalents and Short-Term Investments728.94M651.55M921.23M861.56M618.34M745.62M
Total Debt1.80B1.39B1.06B1.15B1.16B1.02B
Total Liabilities2.47B2.02B1.74B1.82B1.76B1.52B
Stockholders Equity5.29B5.14B4.61B3.95B3.04B2.35B
Cash Flow
Free Cash Flow-252.58M-256.23M317.38M378.30M-177.76M510.43M
Operating Cash Flow-224.95M-227.58M355.57M405.27M-152.09M530.36M
Investing Cash Flow-53.68M-44.07M-43.62M-32.29M-26.82M-18.23M
Financing Cash Flow176.00M1.98M-252.28M-129.76M51.63M-85.97M

Meritage Technical Analysis

Technical Analysis Sentiment
Negative
Last Price67.08
Price Trends
50DMA
73.90
Negative
100DMA
71.87
Negative
200DMA
70.94
Negative
Market Momentum
MACD
-0.90
Negative
RSI
34.85
Neutral
STOCH
47.20
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTH, the sentiment is Negative. The current price of 67.08 is below the 20-day moving average (MA) of 70.23, below the 50-day MA of 73.90, and below the 200-day MA of 70.94, indicating a bearish trend. The MACD of -0.90 indicates Negative momentum. The RSI at 34.85 is Neutral, neither overbought nor oversold. The STOCH value of 47.20 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MTH.

Meritage Risk Analysis

Meritage disclosed 32 risk factors in its most recent earnings report. Meritage reported the most risks in the "Production" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Meritage Peers Comparison

Overall Rating
UnderperformOutperform
Sector (61)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
$2.74B9.419.47%-16.60%-29.85%
$7.18B29.9737.03%1.17%3.44%0.25%
$4.06B8.9513.04%1.57%-0.95%-9.22%
$5.77B7.1114.31%6.98%9.74%
$4.77B9.4910.50%2.48%-6.06%-32.39%
$3.43B7.6915.76%4.77%-9.30%
$18.38B12.79-2.54%3.03%1.52%-15.83%
* Consumer Cyclical Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
MTH
Meritage
67.08
-19.68
-22.68%
KBH
KB Home
62.71
-14.43
-18.71%
MHO
M/I Homes
125.05
-27.95
-18.27%
TPH
Tri Pointe
31.85
-8.66
-21.38%
TMHC
Taylor Morrison
59.08
-10.34
-14.89%
IBP
Installed Building Products
262.76
49.24
23.06%

Meritage Corporate Events

Meritage Homes Reports Q3 2025 Financial Results
Oct 30, 2025

Meritage Homes Corporation is a leading U.S. homebuilder known for its energy-efficient and affordable homes, operating across multiple states including Arizona, California, and Texas. In its third quarter of 2025, Meritage Homes reported a decrease in home closing revenue by 12% compared to the previous year, despite an increase in home orders by 4%. The company closed 3,685 homes in the quarter, generating $1.4 billion in revenue, though average sales prices and gross margins saw declines due to increased use of incentives and higher costs. The company also returned $85 million to shareholders through dividends and share repurchases. Despite challenges, Meritage Homes expanded its community count by 20% year-over-year and maintained a strong liquidity position with $729 million in cash. Looking forward, Meritage Homes remains focused on its strategy to navigate the evolving housing market, aiming for stable home closing volumes and revenue in the upcoming quarter.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Oct 30, 2025