Meritage Homes CORP (NYSE: MTH)

Sector: Consumer Cyclical Industry: Residential Construction CIK: 0000833079
Market Cap 5.67 Bn
P/B 1.09
P/E 12.52
P/S 0.97
ROIC (Qtr) 6.23
Div Yield % 2.15
Rev 1y % (Qtr) -11.47
Total Debt (Qtr) 1.83 Bn
Debt/Equity (Qtr) 0.35
Add ratio to table...

About

Meritage Homes Corporation, known as Meritage Homes, operates in the real estate and construction industry, and is listed on the New York Stock Exchange under the ticker symbol MTH. The company is a leading designer and builder of single-family attached and detached homes, operating in three regions: West, Central, and East, which cover ten states across the United States. Meritage Homes' main business activities involve the design, construction, and sale of new homes, primarily in the entry-level and first move-up segments. The company's primary...

Read more

Investment thesis

Bull case

  • Strong tangible asset base of 7.62B provides 4.17x coverage of total debt 1.83B, indicating robust asset backing and low credit risk.
  • Robust free cash flow of 92.82M exceeds capital expenditure of 25.47M by 3.64x, indicating strong organic growth funding capability.
  • Operating cash flow of 118.29M provides strong 4.64x coverage of capital expenditure 25.47M, enabling organic growth.
  • Retained earnings of 5.19B represent substantial 1x of equity 5.20B, indicating strong internal capital generation.
  • Cash position of 775.16M fully covers payables of 200.68M by 3.86x, showing strong vendor relationship management.

Bear case

  • Operating cash flow of 118.29M barely covers its investment activities of (57.70M), with a coverage ratio of -2.05, indicating heavy reliance on external financing for growth which may not be sustainable in a tighter credit environment.
  • Operating cash flow of 118.29M provides thin coverage of dividend payments of (121.07M) with a -0.98 ratio, suggesting potential dividend sustainability issues if operational performance deteriorates.
  • Cash reserves of 775.16M provide limited coverage of acquisition spending of (32.23M), which is -24.05x, suggesting aggressive expansion might strain liquidity if market conditions deteriorate.
  • Operating cash flow of 118.29M provides minimal 0.90x coverage of tax expenses of 131.59M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Free cash flow of 92.82M represents just 0.19x of debt issuance 479.08M, suggesting concerning reliance on leverage rather than internal cash generation for growth.

Segments Breakdown of Revenue (2025)

Segments Breakdown of Revenue (2025)

Peer comparison

Companies in the Residential Construction
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 DHI Horton D R Inc /De/ 56.51 Bn 105.92 7.04 5.55 Bn
2 TOL Toll Brothers, Inc. 29.11 Bn 76.92 7.08 2.79 Bn
3 PHM Pultegroup Inc/Mi/ 28.02 Bn 12.63 1.62 2.16 Bn
4 LEN Lennar Corp /New/ 23.56 Bn -229.13 7.79 4.08 Bn
5 NVR Nvr Inc 21.52 Bn 16.06 2.13 1.05 Bn
6 IBP Installed Building Products, Inc. 8.62 Bn -487.54 19.34 0.99 Bn
7 TMHC Taylor Morrison Home Corp 6.86 Bn 8.06 0.82 2.26 Bn
8 MTH Meritage Homes CORP 5.67 Bn 12.52 0.97 1.83 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.89 1.47
EV to Cash from Ops. EV/CFO 57.26 43.01
EV to Debt EV to Debt 3.70 37.82
EV to EBIT EV/EBIT 11.59 48.76
EV to EBITDA EV/EBITDA 11.97 112.58
EV to Free Cash Flow [EV/FCF] EV/FCF 72.98 11.82
EV to Market Cap EV to Market Cap 1.19 1.26
EV to Revenue EV/Rev 1.16 3.28
Price to Book Value [P/B] P/B 1.09 9.23
Price to Earnings [P/E] P/E 12.52 -14.72
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Div Coverage (Qtr) 3.74 8.23
Dividend Payout Ratio % Div Payout % (Qtr) 26.90 6.29
Dividend per Basic Share Div per Share (Qtr) 1.72 0.54
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 131.20 96.10
Interest Coverage Int. cover (Qtr) 0.00 142.03
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) 10.30 27.50
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 18.97 196.58
Dividend Growth (1y) % Div 1y % (Qtr) -8.27 4.02
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -42.38 -29.39
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -42.52 -30.05
EBIT Growth (1y) % EBIT 1y % (Qtr) -41.71 -31.27
EBT Growth (1y) % EBT 1y % (Qtr) -41.71 -32.05
EPS Growth (1y) % EPS 1y % (Qtr) -41.01 -25.62
FCF Growth (1y) % FCF 1y % (Qtr) 136.26 341.90
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) -27.63 -14.63
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.77 1.00
Cash Payout Ratio Cash Payout (Qtr) 0.84 0.13
Cash Ratio Cash Ratio 0.00 0.23
Current Ratio Current Ratio 0.00 0.81
Debt to Equity Ratio Debt/Equity (Qtr) 0.35 0.58
Interest Cover Ratio Int Coverage (Qtr) 0.00 142.03
Times Interest Earned Times Interest Earned (Qtr) 0.00 142.03
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 10.40 10.57
EBIT Margin % EBIT Margin % (Qtr) 9.98 9.64
EBT Margin % EBT Margin % (Qtr) 9.98 9.44
Gross Margin % Gross Margin % (Qtr) 19.70 22.26
Net Profit Margin % Net Margin % (Qtr) 7.70 7.17