Meritage Homes Corporation
Meritage Homes Corporation Fundamental Analysis
Meritage Homes Corporation (MTH) shows weak financial fundamentals with a PE ratio of 12.21, profit margin of 6.87%, and ROE of 7.40%. The company generates $5.6B in annual revenue with weak year-over-year growth of -8.40%.
Key Strengths
Areas of Concern
The stock receives a Fundamental Health Score of 35.9/100 based on profitability, valuation, growth, and balance sheet metrics. The F grade reflects weak fundamentals and significant financial concerns.
Fundamental Health Score
We analyze MTH's fundamental strength across five key dimensions:
Efficiency Score
WeakMTH struggles to generate sufficient returns from assets.
Valuation Score
ExcellentMTH trades at attractive valuation levels.
Growth Score
WeakMTH faces weak or negative growth trends.
Financial Health Score
ExcellentMTH maintains a strong and stable balance sheet.
Profitability Score
WeakMTH struggles to sustain strong margins.
Key Financial Metrics
Is MTH Expensive or Cheap?
P/E Ratio
MTH trades at 12.21 times earnings. This suggests potential undervaluation.
PEG Ratio
When adjusting for growth, MTH's PEG of -0.30 indicates potential undervaluation.
Price to Book
The market values Meritage Homes Corporation at 0.92 times its book value. This may indicate undervaluation.
EV/EBITDA
Enterprise value stands at 7.21 times EBITDA. This is generally considered low.
How Well Does MTH Make Money?
Net Profit Margin
For every $100 in sales, Meritage Homes Corporation keeps $6.87 as profit after all expenses.
Operating Margin
Core operations generate 8.09 in profit for every $100 in revenue, before interest and taxes.
ROE
Management delivers $7.40 in profit for every $100 of shareholder equity.
ROA
Meritage Homes Corporation generates $5.10 in profit for every $100 in assets, demonstrating efficient asset deployment.
Following the Money - Real Cash Generation
Operating Cash Flow
Meritage Homes Corporation generates limited operating cash flow of $259.97M, signaling weaker underlying cash strength.
Free Cash Flow
Meritage Homes Corporation produces free cash flow of $235.74M, offering steady but limited capital for shareholder returns and expansion.
FCF Per Share
Each share generates $3.53 in free cash annually.
FCF Yield
MTH converts 5.13% of its market value into free cash.
Financial Ratios Analysis
Valuation Ratios
P/E Ratio
Price to earnings ratio
12.21
vs 25 benchmark
PEG Ratio
Price/earnings to growth ratio
-0.30
vs 25 benchmark
P/B Ratio
Price to book value ratio
0.92
vs 25 benchmark
P/S Ratio
Price to sales ratio
0.83
vs 25 benchmark
Financial Health
Debt/Equity
Total debt to shareholders' equity
0.35
vs 25 benchmark
Current Ratio
Current assets to current liabilities
5.24
vs 25 benchmark
Efficiency Ratios
ROE
Return on equity percentage
0.07
vs 25 benchmark
ROA
Return on assets percentage
0.05
vs 25 benchmark
ROCE
Return on capital employed
0.06
vs 25 benchmark
How MTH Stacks Against Its Sector Peers
| Metric | MTH Value | Sector Average | Performance |
|---|---|---|---|
| P/E Ratio | 12.21 | 24.18 | Better (Cheaper) |
| ROE | 7.40% | 1174.00% | Weak |
| Net Margin | 6.87% | 783.00% | Weak |
| Debt/Equity | 0.35 | 0.79 | Strong (Low Leverage) |
| Current Ratio | 5.24 | 2.59 | Strong Liquidity |
| ROA | 5.10% | -8308.00% (disorted) | Weak |
MTH outperforms its industry in 3 out of 6 key metrics, but lagging in ROE.
Historical Growth Performance
5-Year Growth Trajectory
This section reviews Meritage Homes Corporation's 5-year compound annual growth rate (CAGR) and compares its performance against the typical investment style of its industry.
Revenue CAGR
38.62%
Industry Style: Cyclical, Growth, Discretionary
High GrowthEPS CAGR
13.95%
Industry Style: Cyclical, Growth, Discretionary
High GrowthFCF CAGR
-76.24%
Industry Style: Cyclical, Growth, Discretionary
Declining