Meritage (MTH) AI Stock Analysis

• Market Cap: $5.57B
• Dividend Yield: 2.09%
• Average Volume (3M): 1.20M
• Price to Earnings (P/E): 9.1
• Beta (1Y): 0.98
• Revenue Growth: -3.72%
• EPS Growth: -23.00%
• Country: US
• Employees: 1,898
• Sector: Consumer Cyclical
• Sector Strength: 81
• Industry: Residential Construction
• EPS (TTM): 2.04
• Shares Outstanding: 71,156,136
• 10 Day Avg. Volume: 1,081,278
• 30 Day Avg. Volume: 1,201,543
• PEG Ratio: N/A
• Price to Book (P/B): 0.00
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 0.00
• Enterprise Value/Market Cap: 1.04
• Enterprise Value/Revenue: 0.93
• Enterprise Value/Gross Profit: 4.10
• Enterprise Value/Ebitda: 5.63
• 1Y Price Target: $82.83
• Price Target Upside: 5.79% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 6

• Rating: 76 Outperform
• Price Target: $90.00 ▲(14.94% Upside)

Meritage Homes scores well due to its strong valuation and positive technical indicators. Despite financial challenges such as declining revenue and cash flow issues, the company's operational resilience and strategic focus on move-in ready inventory provide a balanced outlook. The earnings call highlighted both strengths and areas needing attention, contributing to a moderate score.

Positive Factors

Community Growth

Meritage Homes expects double-digit community growth in 2025, and when new communities open, the company typically sees 2-4 times higher sales in the first month compared to the normal pace.

Market Position

Meritage Homes is viewed as a strong operator that has consistently gained market share over the last decade.

Valuation

Meritage trades at 0.9X price-to-book, which is considered an attractive valuation and a good entry point for shares.

Negative Factors

Backlog Stability

Backlog conversion ratio was 220% in 1Q25, well above the 125% long-term target, but this level is likely unsustainable.

Demand Environment

The question is what incentive level/margin will be necessary to continue this pace in a softer overall demand environment.

Housing Demand

Risks for Meritage include high mortgage rates, soft housing demand, rising land prices, and tariff uncertainty.

Meritage Business Overview & Revenue Model

Company Description

Meritage (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 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 and a solid equity base, but faces challenges in cash flow management and declining return on equity. Improvements in cash flow generation are necessary for sustainable growth.

Income Statement

Meritage shows a strong performance in terms of profitability with a stable gross profit margin and a healthy net profit margin over the TTM period. The revenue growth trajectory is moderate, though slightly down from previous years. EBIT and EBITDA margins are also robust, indicating efficient core operations.

Balance Sheet

The balance sheet is solid with a strong equity base, as evidenced by an impressive equity ratio. The debt-to-equity ratio is manageable, suggesting a reasonable leverage level. However, return on equity has been declining, which might indicate pressure on profitability or efficiency in using shareholder funds.

Cash Flow

Cash flow management appears challenging, with negative free cash flow growth and a negative operating cash flow over the TTM. While the company has managed its financing activities, the negative free cash flow to net income ratio is a concern for liquidity and internal cash generation.

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

Meritage Technical Analysis

• Technical Analysis Sentiment: Positive
• Last Price: 78.30
• 50DMA: Positive
• 100DMA: Positive
• 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 78.3 is above the 20-day moving average (MA) of 74.32, above the 50-day MA of 71.39, and above the 200-day MA of 73.72, indicating a bullish trend. The MACD of 1.94 indicates Negative momentum. The RSI at 57.45 is Neutral, neither overbought nor oversold. The STOCH value of 65.56 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
MHO	80 Outperform	$3.88B	8.06	17.56%	―	7.39%	-1.37%
TPH	79 Outperform	$3.12B	9.08	11.38%	―	-3.59%	-10.82%
GRBK	77 Outperform	$3.06B	8.98	22.12%	―	13.87%	6.54%
MTH	76 Outperform	$5.57B	9.13	12.58%	2.09%	-3.72%	-23.00%
TMHC	76 Outperform	$6.72B	7.85	15.59%	―	13.77%	28.57%
KBH	73 Outperform	$4.34B	8.57	14.07%	1.58%	3.65%	-0.61%
Sector *	61 Neutral	$17.75B	12.51	-5.49%	3.06%	1.43%	-14.10%

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.