Meritage (MTH) AI Stock Analysis

• Market Cap: $4.74B
• Dividend Yield: 2.61%
• Average Volume (3M): 788.27K
• Price to Earnings (P/E): 6.5
• Beta (1Y): 1.05
• Revenue Growth: -0.68%
• EPS Growth: -7.99%
• Country: US
• Employees: 1,898
• Sector: Consumer Cyclical
• Sector Strength: 57
• Industry: Residential Construction
• EPS (TTM): 1.69
• Shares Outstanding: 71,830,260
• 10 Day Avg. Volume: 861,365
• 30 Day Avg. Volume: 788,268
• PEG Ratio: 0.04
• Price to Book (P/B): 0.43
• Price to Sales (P/S): 0.00
• P/FCF Ratio: 4.47
• Enterprise Value/Market Cap: 0.42
• Enterprise Value/Revenue: 0.08
• Enterprise Value/Gross Profit: 1.30
• Enterprise Value/Ebitda: 0.49
• 1Y Price Target: $89.33
• Price Target Upside: 38.56% Upside
• Rating Consensus: Moderate Buy
• Number of Analyst Covering: 7

• Rating: 71 Outperform
• Price Target: $71.00 ▲(10.13%Upside)

The overall score reflects a strong valuation and strategic growth initiatives, offset by technical weakness and cash flow challenges. The company's robust guidance and governance improvements are positives, but operational risks from leadership changes and macroeconomic pressures weigh on the outlook.

Positive Factors

Community Growth and Sales

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

Market Share and Valuation

Meritage Homes is gaining market share, has improved its return on equity, and its valuation looks attractive with a price-to-book ratio under 1 and low debt-to-capital.

Negative Factors

Backlog Conversion Stability

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

Demand Environment and Incentives

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

Meritage Business Overview & Revenue Model

Company Description

Meritage Homes Corporation (MTH) is a leading designer and builder of single-family homes in the United States. The company primarily operates in the residential construction sector, focusing on building energy-efficient homes tailored to meet the needs of first-time and move-up buyers. With a commitment to quality and innovation, Meritage offers a variety of home styles and communities across several states, providing buyers with sustainable living options and modern amenities.

How the Company Makes Money

Meritage Homes generates revenue through the construction and sale of single-family homes. The company's primary revenue stream comes from home sales, which encompass the entire process from land acquisition and development to design, construction, and final sale to the consumer. Additionally, Meritage benefits from strategic partnerships with suppliers and contractors to ensure cost-effective sourcing of materials and labor. The company's focus on energy-efficient homes appeals to environmentally conscious consumers and can offer competitive differentiation in the market, potentially leading to increased sales and profitability. Revenue is also influenced by market conditions, including housing demand, interest rates, and economic factors that affect consumer purchasing power.

Meritage Financial Statement Overview

Summary

Meritage demonstrates strong profitability and a solid equity base. However, cash flow issues and declining return on equity are areas of concern, suggesting the need for improved cash flow management and efficient use of equity.

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
TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement		Total Revenue
6.28B	6.39B	6.14B	6.30B	5.15B	4.51B
	Gross Profit
1.52B	1.60B	1.52B	1.80B	1.44B	976.00M
	EBIT
883.56M	958.35M	902.39M	1.29B	973.34M	535.74M
	EBITDA
943.57M	1.03B	972.93M	1.31B	999.59M	566.79M
	Net Income Common Stockholders
722.98M	786.19M	738.75M	992.19M	737.44M	423.48M
Balance Sheet		Cash, Cash Equivalents and Short-Term Investments
1.01B	651.55M	921.23M	861.56M	618.34M	745.62M
	Total Assets
7.70B	7.16B	6.35B	5.77B	4.81B	3.86B
	Total Debt
1.89B	1.39B	1.06B	1.15B	1.16B	1.02B
	Net Debt
881.22M	740.15M	141.03M	289.09M	541.70M	274.46M
	Total Liabilities
2.51B	2.02B	1.74B	1.82B	1.76B	1.52B
	Stockholders Equity
5.19B	5.14B	4.61B	3.95B	3.04B	2.35B
Cash Flow		Free Cash Flow
-380.07M	-256.23M	317.38M	378.30M	-177.76M	510.43M
	Operating Cash Flow
-352.08M	-227.58M	355.57M	405.27M	-152.09M	530.36M
	Investing Cash Flow
-47.72M	-44.07M	-43.62M	-32.29M	-26.82M	-18.23M
	Financing Cash Flow
506.16M	1.98M	-252.28M	-129.76M	51.63M	-85.97M

Meritage Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 64.47
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• 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 Negative. The current price of 64.47 is below the 20-day moving average (MA) of 65.23, below the 50-day MA of 66.25, and below the 200-day MA of 80.39, indicating a bearish trend. The MACD of -0.48 indicates Negative momentum. The RSI at 45.65 is Neutral, neither overbought nor oversold. The STOCH value of 44.64 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
TMHC	79 Outperform	$5.96B	6.75	15.97%	―	12.19%	23.15%
MHO	77 Outperform	$2.96B	5.66	19.02%	―	8.68%	8.39%
GRBK	77 Outperform	$2.69B	7.18	24.29%	―	21.22%	24.90%
TPH	74 Outperform	$2.83B	6.76	13.28%	―	10.82%	19.34%
MTH	71 Outperform	$4.74B	6.53	14.58%	2.61%	-0.68%	-7.99%
KBH	68 Neutral	$3.86B	6.40	15.58%	1.86%	5.54%	11.12%
Sector *	62 Neutral	$6.90B	11.05	2.80%	4.27%	2.67%	-24.92%

Meritage Corporate Events

Meritage Homes Implements Board Declassification Amendments

On May 22, 2025, Meritage Homes Corporation’s Board of Directors implemented amendments to their bylaws to declassify the Board, following stockholder approval at the Annual Meeting. This change is part of a broader effort to enhance governance and transparency within the company. During the same meeting, stockholders elected new directors, ratified Deloitte & Touche LLP as the independent accounting firm for 2025, approved executive compensation, and supported a proposal for transparency in political spending. These decisions reflect a commitment to accountability and strategic governance, potentially impacting the company’s operational and market positioning.

The most recent analyst rating on (MTH) stock is a Hold with a $98.50 price target. To see the full list of analyst forecasts on Meritage stock, see the MTH Stock Forecast page.

Meritage COO Clint Szubinski Announces Resignation

On May 7, 2025, Clint Szubinski, the Executive Vice President and Chief Operating Officer of Meritage Homes, announced his resignation for personal reasons. His departure, effective May 16, 2025, marks a significant change in the company’s leadership, potentially impacting its operational strategies and stakeholder relations.

The most recent analyst rating on (MTH) stock is a Hold with a $98.50 price target. To see the full list of analyst forecasts on Meritage stock, see the MTH Stock Forecast page.