Meritage (MTH)
NYSE:MTH
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Meritage
(NYSE:MTH)
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Rating:60Neutral
Price Target:
$64.00
▼(-1.61% Downside)
Action:DowngradedDate:01/31/26
The score is driven primarily by weakening fundamentals and cash flow volatility, which outweigh the otherwise solid balance sheet. Valuation (low P/E and dividend) provides support, but technical signals and cautious guidance reflect ongoing near-term demand and margin pressure.
Positive Factors
Balance Sheet & Liquidity
Substantial liquidity and low net leverage create durable financial flexibility. With $775M cash and net debt-to-cap ~16.9%, Meritage can fund land buys, weather cyclical downturns, and sustain shareholder returns (buybacks/dividends) without forcing distressed asset sales or emergency financing.
Negative Factors
Margin Compression & Profit Decline
Sustained gross margin compression reduces operating leverage and returns on invested capital. A multi-hundred basis point drop signals pricing or cost pressures that, if persistent, will constrain cash flow, limit reinvestment capacity, and erode long-term ROE despite balance sheet strength.
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Positive Factors
Negative Factors
Balance Sheet & Liquidity
Substantial liquidity and low net leverage create durable financial flexibility. With $775M cash and net debt-to-cap ~16.9%, Meritage can fund land buys, weather cyclical downturns, and sustain shareholder returns (buybacks/dividends) without forcing distressed asset sales or emergency financing.
Read all positive factors
Meritage (MTH) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$4.35B
Dividend Yield2.62%
Average Volume (3M)950.33K
Price to Earnings (P/E)10.3
Beta (1Y)0.79
Revenue Growth-6.06%
EPS Growth-32.39%
CountryUS
Employees1,898
SectorConsumer Cyclical
Sector Strength84
IndustryResidential Construction
Share Statistics
EPS (TTM)1.20
Shares Outstanding66,800,670
10 Day Avg. Volume710,208
30 Day Avg. Volume950,328
Financial Highlights & Ratios
PEG Ratio-0.25
Price to Book (P/B)0.90
Price to Sales (P/S)0.80
P/FCF Ratio50.34
Enterprise Value/Market Cap1.31
Enterprise Value/Revenue0.97
Enterprise Value/Gross Profit4.93
Enterprise Value/Ebitda9.66
Forecast
1Y Price Target
$82.57Price Target Upside26.93% Upside
Rating ConsensusModerate Buy
Number of Analyst Covering9
EPS Forecast (FY)5.83
Revenue Forecast (FY)$5.77B
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,...
How the Company Makes Money
Meritage makes money primarily by building and selling newly constructed homes to homebuyers. Revenue is recognized from home sales when closings occur, and the company’s profitability is driven by the difference between the selling price of homes...
Meritage Earnings Call Summary
Earnings Call Date:Jan 28, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 22, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: Meritage demonstrated operational strengths (record backlog conversion, faster cycle times, disciplined spec management, direct cost savings, strong liquidity) and aggressive capital returns (robust buybacks and dividends). However, those positives were offset by meaningful near-term weaknesses — lower revenue and closings, substantial margin compression, sizable nonrecurring land walkaway and impairment charges, elevated incentives, and reduced absorption/starts — leading management to adopt a conservative near-term posture. The company emphasizes long-term confidence in its strategy and a healthy balance sheet but faces material short-term profitability and demand headwinds.Positive Updates
Exceptional Backlog Conversion and Faster Cycle Times
All-time high backlog conversion rate of 221% in Q4 (benefiting from a 60-day closing guarantee); cycle times improved to sub-110 calendar days, enabling a higher share of intra-quarter deliveries and greater operational flexibility.
Negative Updates
Decline in Revenue and Volume
Q4 home closing revenue of $1.4 billion was down 12% year-over-year, driven by 7% lower home closing volume and a 5% decline in ASP on closings to $375,000; full-year 2025 home closing revenue fell 9% to $5.8 billion and closings were down 4% versus prior year.
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Q4-2025 Updates
Positive
Negative
Exceptional Backlog Conversion and Faster Cycle Times
All-time high backlog conversion rate of 221% in Q4 (benefiting from a 60-day closing guarantee); cycle times improved to sub-110 calendar days, enabling a higher share of intra-quarter deliveries and greater operational flexibility.
Read all positive updates
Company Guidance
Management guided full‑year 2026 to be roughly in line with 2025 on both units and home closing revenue (2025: ~14,650 homes; $5.8B), and provided Q1 2026 guidance of 3,000–3,300 closings, $1.13–$1.24B of home closing revenue, home closing gross margin of 18%–19%, an effective tax rate of ~24% and diluted EPS of $0.87–$1.13. They reiterated longer‑term operating targets — average absorption of ~4 net sales/month, long‑term gross margin of 22.5%–23.5%, SG&A target ~9.5% and backlog conversion target of 175%–200% — and expect community count growth of 5%–10% off year‑end 336. On capital allocation they committed to redeploy $400M to buybacks in 2026 (programmatic $100M/quarter), forecast up to $2B of land acquisition/development spend, and enter the year with $775M cash, net debt‑to‑cap of 16.9% (ceiling mid‑20s) and $514M available under the repurchase program.Meritage Financial Statement Overview
Summary
Income Statement
63
Positive
Balance Sheet
72
Positive
Cash Flow
44
Neutral
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 5.86B | 6.40B | 6.14B | 6.29B | 5.14B |
| Gross Profit | 1.15B | 1.60B | 1.52B | 1.80B | 1.44B |
| EBITDA | 562.76M | 984.30M | 927.72M | 1.31B | 996.82M |
| Net Income | 453.01M | 786.19M | 738.75M | 992.19M | 737.44M |
Balance Sheet | |||||
| Total Assets | 7.65B | 7.16B | 6.35B | 5.77B | 4.82B |
| Cash, Cash Equivalents and Short-Term Investments | 775.16M | 651.55M | 921.23M | 861.56M | 618.34M |
| Total Debt | 1.89B | 1.39B | 1.06B | 1.17B | 1.19B |
| Total Liabilities | 2.46B | 2.02B | 1.74B | 1.82B | 1.76B |
| Stockholders Equity | 5.20B | 5.14B | 4.61B | 3.95B | 3.04B |
Cash Flow | |||||
| Free Cash Flow | 92.57M | -256.23M | 317.38M | 378.30M | -177.76M |
| Operating Cash Flow | 118.29M | -227.58M | 355.57M | 405.27M | -152.09M |
| Investing Cash Flow | -57.70M | -44.07M | -43.62M | -32.29M | -26.82M |
| Financing Cash Flow | 63.01M | 1.98M | -252.28M | -129.76M | 51.63M |
Meritage Technical Analysis
Neutral
65.05
Price Trends
68.81
Negative
69.23
Negative
70.17
Negative
Market Momentum
-1.72
Negative
52.26
Neutral
74.70
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For MTH, the sentiment is Neutral. The current price of 65.05 is above the 20-day moving average (MA) of 61.87, below the 50-day MA of 68.81, and below the 200-day MA of 70.17, indicating a neutral trend. The MACD of -1.72 indicates Negative momentum. The RSI at 52.26 is Neutral, neither overbought nor oversold. The STOCH value of 74.70 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Neutral 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
UnderperformOutperform
Sector (61)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $5.68B | 8.21 | 12.83% | ― | 6.98% | 9.74% | |
72 Outperform | $7.60B | 26.29 | 39.12% | 1.20% | 2.12% | 3.08% | |
71 Outperform | $3.03B | 8.49 | 12.99% | ― | 4.77% | -9.30% | |
71 Outperform | $3.98B | 11.14 | 7.29% | ― | -16.60% | -29.85% | |
61 Neutral | $18.38B | 12.79 | -2.54% | 3.03% | 1.52% | -15.83% | |
60 Neutral | $4.35B | 10.29 | 8.65% | 2.62% | -6.06% | -32.39% | |
58 Neutral | $3.20B | 29.80 | 8.64% | 1.76% | -10.01% | -27.81% |
* Consumer Cyclical Sector Average
MTH
Meritage
65.05
0.17
0.26%
KBH
KB Home
51.41
-1.71
-3.22%
MHO
M/I Homes
123.88
13.48
12.21%
TPH
Tri Pointe
46.72
16.44
54.29%
TMHC
Taylor Morrison
59.01
1.59
2.77%
IBP
Installed Building Products
281.85
110.46
64.45%
Meritage Corporate Events
Executive/Board Changes
Meritage Homes Updates Executive Compensation and Incentive Structure
Neutral
Mar 26, 2026
On March 23, 2026, Meritage Homes Corporation’s Executive Compensation Committee approved increases to certain compensation components for Chief Executive Officer Phillippe Lord, Chief Financial Officer Hilla Sferruzza, General Counsel Malis...
Executive/Board Changes
Meritage Board Member Resignation Prompts Director Count Reduction
Neutral
Feb 19, 2026
On February 17, 2026, Meritage Homes Corporation announced that board member Dennis V. Arriola would step down from the Board of Directors, effective March 31, 2026, with the company stating that his resignation was not due to any disagreement. Fo...
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.