Meritage (MTH) AI Stock Analysis

• Market Cap: $5.32B
• Dividend Yield: 2.23%
• Average Volume (3M): 792.73K
• Price to Earnings (P/E): 8.5
• Beta (1Y): 0.92
• Revenue Growth: -3.72%
• EPS Growth: -23.00%
• Country: US
• Employees: 1,898
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Residential Construction
• EPS (TTM): 2.04
• Shares Outstanding: 71,156,136
• 10 Day Avg. Volume: 636,530
• 30 Day Avg. Volume: 792,729
• PEG Ratio: 0.93
• Price to Book (P/B): 1.08
• Price to Sales (P/S): 0.87
• P/FCF Ratio: -21.75
• Enterprise Value/Market Cap: 1.08
• Enterprise Value/Revenue: 0.93
• Enterprise Value/Gross Profit: 4.07
• Enterprise Value/Ebitda: 6.78
• 1Y Price Target: $83.17
• Price Target Upside: 15.21% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 68 Neutral
• Price Target: $79.00 ▲(9.43% Upside)

Meritage Homes demonstrates strong valuation and profitability, but faces challenges with cash flow and market conditions impacting revenue and margins. Technical indicators suggest bearish momentum, while the earnings call reflects a balanced view of operational achievements and financial challenges.

Positive Factors

Record Community Count

The record community count indicates strategic expansion and increased market presence, which can drive long-term revenue growth and competitive positioning in the housing market.

Improved Cycle Times

Improved cycle times enhance operational efficiency, allowing faster turnover of inventory and potentially increasing profitability through quicker sales and reduced holding costs.

Strong Balance Sheet

A strong balance sheet with low leverage provides financial stability and flexibility, enabling the company to invest in growth opportunities and weather economic downturns.

Negative Factors

Decreased Revenue and Gross Margin

Declining revenue and gross margins indicate potential challenges in maintaining profitability, which could impact long-term financial performance if market conditions do not improve.

Lower Average Sales Price

A decrease in average sales price can pressure margins and profitability, suggesting the need for strategic adjustments to maintain financial health amid competitive pricing pressures.

Higher SG&A Percentage

Rising SG&A expenses relative to revenue can erode profitability, indicating the need for cost control measures to sustain operational efficiency and financial performance.

Meritage Business Overview & Revenue Model

Company Description

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for first-time and first move-up buyers. The company also offers title insurance and closing/settlement services to its homebuyers. It builds and sells homes in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia, and Tennessee under the Meritage Homes brand name. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.

How the Company Makes Money

Meritage 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 Financial Statement Overview

Summary

Meritage demonstrates strong profitability with robust profit margins and a healthy balance sheet. However, declining revenue and negative free cash flow indicate potential areas for improvement, particularly in cash management.

Income Statement

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

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

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.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.21B	6.39B	6.14B	6.30B	5.15B	4.51B
Gross Profit	1.42B	1.60B	1.52B	1.80B	1.44B	976.00M
EBITDA	850.47M	1.03B	972.93M	1.31B	999.59M	566.79M
Net Income	638.30M	786.19M	738.75M	992.19M	737.44M	423.48M
Balance Sheet
Total Assets	7.76B	7.16B	6.35B	5.77B	4.81B	3.86B
Cash, Cash Equivalents and Short-Term Investments	930.46M	651.55M	921.23M	861.56M	618.34M	745.62M
Total Debt	1.80B	1.39B	1.06B	1.15B	1.16B	1.02B
Total Liabilities	2.49B	2.02B	1.74B	1.82B	1.76B	1.52B
Stockholders Equity	5.27B	5.14B	4.61B	3.95B	3.04B	2.35B
Cash Flow
Free Cash Flow	-248.29M	-256.23M	317.38M	378.30M	-177.76M	510.43M
Operating Cash Flow	-220.43M	-227.58M	355.57M	405.27M	-152.09M	530.36M
Investing Cash Flow	-46.05M	-44.07M	-43.62M	-32.29M	-26.82M	-18.23M
Financing Cash Flow	204.02M	1.98M	-252.28M	-129.76M	51.63M	-85.97M

Meritage Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 72.19
• 50DMA: Negative
• 100DMA: Positive
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: 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 72.19 is below the 20-day moving average (MA) of 74.93, below the 50-day MA of 74.90, and above the 200-day MA of 71.43, indicating a neutral trend. The MACD of -0.85 indicates Positive momentum. The RSI at 42.15 is Neutral, neither overbought nor oversold. The STOCH value of 57.85 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for MTH.

Meritage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
MHO	80 Outperform	$3.78B	7.85	17.56%	―	7.39%	-1.37%
IBP	78 Outperform	$6.55B	26.96	37.03%	1.32%	3.44%	0.25%
TPH	76 Outperform	$2.96B	8.63	11.38%	―	-3.59%	-10.82%
TMHC	73 Outperform	$6.57B	7.67	15.59%	―	13.77%	28.57%
KBH	69 Neutral	$4.47B	9.23	13.06%	1.63%	-0.95%	-9.08%
MTH	68 Neutral	$5.32B	8.52	12.58%	2.23%	-3.72%	-23.00%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

Meritage Corporate Events

Meritage Extends Credit Agreement Maturity to 2030

On July 9, 2025, Meritage Homes Corporation entered into the Eleventh Amendment to its Amended and Restated Credit Agreement, originally dated June 13, 2014. This amendment extends the maturity date of the credit agreement from June 12, 2029, to July 9, 2030, impacting the company’s financial planning and potentially influencing its market strategies.