Meritage (MTH) AI Stock Analysis

• Market Cap: $5.07B
• Dividend Yield: 2.31%
• Average Volume (3M): 770.67K
• Price to Earnings (P/E): 9.6
• Beta (1Y): 0.78
• Revenue Growth: -6.06%
• EPS Growth: -32.39%
• Country: US
• Employees: 1,898
• Sector: Consumer Cyclical
• Sector Strength: 84
• Industry: Residential Construction
• EPS (TTM): 1.39
• Shares Outstanding: 70,406,710
• 10 Day Avg. Volume: 607,839
• 30 Day Avg. Volume: 770,673
• 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: 1.25
• Enterprise Value/Revenue: 1.05
• Enterprise Value/Gross Profit: 4.88
• Enterprise Value/Ebitda: 9.10
• 1Y Price Target: $83.33
• Price Target Upside: 15.80% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6
• EPS Forecast (FY): 6.74
• Revenue Forecast (FY): $5.93B

• Rating: 69 Neutral
• Price Target: $78.00 ▲(8.39% 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 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 new homes, which accounts for the majority of its earnings. The company operates in various geographic markets, allowing it to capitalize on regional demand for housing. In addition to home sales, Meritage also earns income from land development activities and the sale of residential lots to other builders. Strategic partnerships with suppliers and subcontractors enable the company to manage costs effectively and maintain quality construction. Furthermore, Meritage's focus on energy-efficient homes allows it to appeal to environmentally conscious buyers, potentially leading to higher sales prices and profit margins. The company's ability to navigate market trends and adapt to changing consumer preferences plays a crucial role in its revenue generation.

Meritage Financial Statement Overview

Summary

Meritage demonstrates a stable financial position with strong profitability metrics and a solid balance sheet. However, the decline in revenue growth and negative cash flows highlight potential areas of concern that need to be addressed to sustain long-term growth and liquidity.

Income Statement

Meritage's income statement shows a mixed performance. The TTM data indicates a decline in revenue growth rate by 2.79%, reflecting challenges in maintaining sales momentum. However, the company maintains a healthy gross profit margin of 21.46% and a net profit margin of 8.97%, indicating efficient cost management. The EBIT and EBITDA margins are also solid at 11.64% and 12.06% respectively, though they have decreased compared to the previous year.

Balance Sheet

The balance sheet is robust with a low debt-to-equity ratio of 0.34, suggesting prudent financial leverage. The return on equity stands at 10.37%, which, while lower than previous years, still indicates effective use of equity. The equity ratio is strong, reflecting a solid capital structure with a significant portion of assets financed by equity.

Cash Flow

Cash flow analysis reveals some concerns. The company has negative operating and free cash flows in the TTM period, indicating potential liquidity challenges. However, the free cash flow to net income ratio is positive at 1.12, suggesting that the company is generating cash relative to its net income, albeit less efficiently than before.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	6.04B	6.40B	6.14B	6.29B	5.14B	4.50B
Gross Profit	1.30B	1.60B	1.52B	1.80B	1.44B	1.00B
EBITDA	693.93M	984.30M	927.72M	1.31B	996.82M	585.03M
Net Income	541.63M	786.19M	738.75M	992.19M	737.44M	423.48M
Balance Sheet
Total Assets	7.76B	7.16B	6.35B	5.77B	4.82B	3.86B
Cash, Cash Equivalents and Short-Term Investments	728.94M	651.55M	921.23M	861.56M	618.34M	745.62M
Total Debt	1.89B	1.39B	1.06B	1.17B	1.19B	1.08B
Total Liabilities	2.47B	2.02B	1.74B	1.82B	1.77B	1.52B
Stockholders Equity	5.29B	5.14B	4.61B	3.95B	3.04B	2.35B
Cash Flow
Free Cash Flow	-252.58M	-256.23M	317.38M	378.30M	-177.76M	510.43M
Operating Cash Flow	-224.95M	-227.58M	355.57M	405.27M	-152.09M	530.36M
Investing Cash Flow	-53.68M	-44.07M	-43.62M	-32.29M	-26.82M	-18.23M
Financing Cash Flow	176.00M	1.98M	-252.28M	-129.76M	51.63M	-85.97M

Meritage Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 71.96
• 50DMA: Positive
• 100DMA: Negative
• 200DMA: Positive
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTH, the sentiment is Positive. The current price of 71.96 is above the 20-day moving average (MA) of 70.57, above the 50-day MA of 69.55, and above the 200-day MA of 69.94, indicating a bullish trend. The MACD of 0.84 indicates Negative momentum. The RSI at 54.23 is Neutral, neither overbought nor oversold. The STOCH value of 49.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for MTH.

Meritage Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TMHC	76 Outperform	$6.12B	7.53	14.31%	―	6.98%	9.74%
KBH	76 Outperform	$4.25B	9.20	13.04%	1.53%	-0.95%	-9.22%
MHO	75 Outperform	$3.55B	7.97	15.76%	―	4.77%	-9.30%
IBP	74 Outperform	$7.39B	29.33	36.66%	1.17%	2.12%	3.08%
TPH	73 Outperform	$2.90B	9.96	9.47%	―	-16.60%	-29.85%
MTH	69 Neutral	$5.07B	9.61	10.50%	2.31%	-6.06%	-32.39%
Sector *	61 Neutral	$18.38B	12.79	-2.54%	3.03%	1.52%	-15.83%

Meritage Corporate Events

Meritage Homes Reports Q3 2025 Financial Results

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.