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Verdict
Quantitative factor alignment verified for current market regime.
Quant Score
Rank
#2461
Positioning
Market Dominance
Construction
Construction
$5.2B
Phillippe Lord
Meritage Homes Corporation designs and builds single-family homes in the United States. It builds and sells homes in Texas, Arizona, California, Colorado, Florida, North Carolina, South Carolina, Georgia, and Tennessee. The company also offers title insurance and closing/settlement services to its homebuyers.
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Dates updated upon official exchange announcement.
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X-AXIS: EV/EBITDA (LOWER = CHEAPER) | Y-AXIS: ROE (HIGHER = ELITE) | RED CIRCLE = MTH ANALYSIS TARGET
| Stock | Rating | Score▼ | Quality | Value | Momentum | P/E | EV/EBITDA | ROE | ROA | Gross Mgn | Op Mgn | Net Mgn | Rev Growth | Div Yield | D/E | Mkt Cap | AUDIT |
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
$FER Ferrovial SE | 76 | 89 | 94 | 72 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$CX CEMEX SAB DE CV | 74 | 81 | 87 | 87 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$MWA Mueller Water Products, Inc. | 69 | 85 | 87 | 57 | 17.9x | 11.0x | 22.8% | 11.7% | 38.3% | 19.4% | 13.8% | 6.6% | 1.1% | 49.0x | $3.8B | VS | |
$TOL Toll Brothers, Inc. | 69 | 83 | 92 | 63 | 7.9x | 5.6x | 17.3% | 9.8% | 25.2% | 16.6% | 12.6% | 8.0% | 0.8% | 36.0x | $11.6B | VS | |
$GFF GRIFFON CORP | 68 | 86 | 82 | 60 | - | - | -274.0% | -22.1% | 43.2% | -20.5% | -19.6% | -5.3% | 0.9% | 2271.0x | $3.4B | VS | |
$FIX COMFORT SYSTEMS USA INC | 68 | 80 | 43 | 97 | 25.0x | 18.1x | 52.7% | 19.4% | 24.8% | 15.5% | 11.9% | 35.2% | 0.2% | 6.0x | $29.1B | VS | |
$BBU Brookfield Business Partners L.P. | 66 | 63 | 94 | 68 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$PHOE Phoenix Asia Holdings Ltd | 64 | 95 | 97 | 40 | - | - | - | - | - | - | - | - | - | - | $0 | VS | |
$EME EMCOR Group, Inc. | 64 | 75 | 42 | 80 | 24.6x | 16.0x | 36.5% | 14.0% | 19.4% | 9.4% | 6.9% | 16.4% | 0.1% | 3.0x | $29.1B | VS | |
$DY DYCOM INDUSTRIES INC | 64 | 68 | 58 | 89 | 19.9x | 9.7x | 29.4% | 11.8% | 22.1% | 10.4% | 7.3% | 14.1% | 0.0% | 63.0x | $8.5B | VS | |
$MTH Meritage Homes CORP | 47 | 26 | 52 | 46 | 9.4x | 9.6x | 10.9% | 7.4% | 19.0% | 8.0% | 7.0% | -10.7% | 2.3% | 47.0x | $5.2B | ||
| SECTOR BENCH | - | - | - | - | - | 19.1x | 10.7x | 14.8% | 6.4% | 24.1% | 8.2% | 6.2% | 2.4% | 0.0% | 0.5x | - | REF |
Meritage Homes CORP (MTH) receives a "Reduce" rating with a composite score of 47.1/100. It ranks #2461 out of 7,333 stocks in our coverage universe and carries a 2-star rating. Ratings are driven by a 6-factor quantitative model measuring quality, value, momentum, investment, stability, and short interest.
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In-line with peers — no strong momentum signal
Fair valuation relative to peers
Weak fundamentals — higher risk of value trap
Low volatility — smoother ride and historically better risk-adjusted returns
Moderate investment profile
Mid-range overall rating
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Relative valuation derived from Construction sector benchmarks. Model weights: EV/EBITDA (40%), P/B (35%), P/S (25%). Re-calculated daily.
Projection based on user-defined inputs. Re-calculated daily against current market data.
Reverse DCF Framework — Mauboussin Methodology
Institutional-grade Reverse DCF analysis. This model identifies the growth hurdles embedded in current market prices. When implied growth is significantly lower than historical or projected rates, a margin of safety may exist. Re-audited daily.
No analyst ratings for MTH.
View All Ratings| Factor | Global | Sector | Tilt |
|---|---|---|---|
| PROFITABILITY | 26 | 13 | +13ALPHA |
| MOMENTUM | 46 | 44 | +2NEUTRAL |
| VALUATION | 52 | 54 | -2NEUTRAL |
| INVESTMENT | 36 | 60 | -24DRAG |
| STABILITY | 72 | 79 | -7DRAG |
| SHORT INT | 75 | 88 | -13DRAG |
Global = full universe. Sector = relative to industry peers. Positive tilt indicates idiosyncratic strength.
ROIC 5.6% vs WACC 7.9% (spread -2.3%)
GM 19% vs sector 24%, OM 8% vs sector 8%
Capital turnover 1.33x
Rev growth -11%, 5yr history
Interest coverage N/A, Net debt/EBITDA 8.0x
Composite assessment of profitability, capital efficiency, and financial strength. Top-tier entities demonstrate sustainable cash flow generation and elite competitive moats.
Profit generated per dollar of shareholder equity
Efficiency of asset utilization
Pricing power and cost efficiency
Core business profitability
Bottom-line profitability
The Quality factor evaluates the persistence and magnitude of realized cash flows. Companies with scores >70 exhibit superior pricing power and structural financial resilience through diverse economic regimes.
Our uncertainty rating tracks the predictability of future cash flows and potential for permanent capital loss. Moderate visibility with standard industry cyclicality.
We rate Meritage Homes CORP (MTH) as a Reduce with a composite score of 47.1/100 at a current price of $77.53. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential.
Meritage Homes CORP holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 47.1/100 places it at rank #2461 in our full universe.
No Moat
Low
Standard
Fair Value
Stable competitive position in a defensive sector.
Below-average quality raises earnings sustainability concerns.
Vulnerability to macroeconomic shocks and interest rate volatility.
Meritage Homes CORP represents a reduce based on multi-factor quantitative performance.
Meritage Homes CORP receives a Reduce rating from our analysis, with a composite score of 47.1/100 and 2 out of 5 stars, ranking #2461 out of 7,333 stocks. MTH's factor profile shows weakness across multiple dimensions, suggesting the stock may underperform going forward. Existing holders may want to consider trimming positions or tightening stop-losses.
MTH's quality score of 26/100 is below average, suggesting challenges with profitability or capital efficiency. The company reports a return on equity of 10.9% (sector avg: 14.8%), gross margins of 19.0% (sector avg: 24.1%), net margins of 7.0% (sector avg: 6.2%). Investors should examine whether management is actively addressing these weaknesses or if they reflect structural industry headwinds.
MTH's value score of 52/100 indicates the stock is fairly valued based on its current fundamentals. Key valuation metrics include a P/E ratio of 9.39x, an EV/EBITDA of 9.60x, a P/B ratio of 1.02x. At this level, neither a clear bargain nor overpriced, the stock's attractiveness depends more on forward growth expectations and qualitative factors.
Meritage Homes CORP's investment score of 36/100 suggests limited reinvestment activity. Key growth metrics include revenue growth of -10.7% vs. a sector average of 2.4% and a return on assets of 7.4% (sector: 6.4%). While this can be positive for mature, cash-generative businesses returning capital to shareholders, it may also signal a lack of growth opportunities or management conservatism.
MTH is currently showing below-average momentum at 46/100, which may indicate weakening institutional interest or negative sentiment shifts. Revenue growth stands at -10.7% year-over-year, while a beta of 0.78 reflects its sensitivity to broader market moves. Investors should note that declining momentum can precede further price weakness, though contrarian opportunities sometimes emerge at these levels.
MTH shows good financial stability with a score of 72/100. Key stability metrics include a beta of 0.78 and a debt-to-equity ratio of 47.00x (sector avg: 0.5x). This suggests manageable leverage and moderate price volatility, making it appropriate for investors seeking a balance between growth potential and capital preservation.
MTH carries a short interest score of 75/100, indicating moderate short selling activity. This is a neutral reading — not enough to signal systemic bearishness, but worth monitoring. Specific risk factors include elevated leverage (D/E: 47.00x). At $5.2B market cap (mid-cap), Meritage Homes CORP offers reasonable institutional liquidity.
MTH pays a solid dividend yield of 2.3%, contributing an income component to total returns. This moderate yield suggests a balance between returning capital to shareholders and retaining earnings for reinvestment — a common profile among quality compounders.
Meritage Homes CORP is a mid-cap company in the Construction sector, ranked #0 of 50 in its sector (100th percentile) and #2461 of 7,333 overall (66th percentile). Key comparisons include ROE of 10.9% trailing the 14.8% sector median and operating margins of 8.0% below the 8.2% sector average. This top-quartile standing reflects exceptional competitive strength relative to Construction peers.
While MTH currently exhibits a REDUCE profile, superior opportunities exist within the CONSTRUCTION sector. Our model identifies several "Strong Buy" candidates with higher quality scores and more attractive valuations among direct industry competitors.
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Improvement in Quality (26) would have the largest impact on the composite score.
EV/EBITDA 10% BELOW SECTOR MEDIAN (FAVORABLE)
ROE 26% BELOW SECTOR MEDIAN
Gross Margin 21% BELOW SECTOR MEDIAN
Above 50MA
37.18%
Net New Highs
+51081
Berkshire Hathaway has invested approximately $1 billion in three major homebuilders. While the investment appears promising, Warren Buffett's investment philosophy suggests individual investors might find better opportunities in smaller homebuilding companies.
Meritage Homes reported Q2 2025 earnings of $2.04 per share, beating analyst estimates but showing significant year-over-year decline. The homebuilder experienced reduced margins, lower average sales prices, and decreased backlog, reflecting challenging housing market conditions.
The article discusses the current state of the housing market, with a focus on earnings from Lennar, the largest home builder in America. The hosts, Matt Frankel and Jason Hall, share their top three home builder picks, including Green Brick Partners, Meritage Homes, and LGI Homes.
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