Analyzing Meritage Homes (MTH) and Its Peers

Meritage Homes (NYSE:MTH) is one of 150 public companies in the “Household Durables” industry, but how does it contrast to its rivals? We will compare Meritage Homes to similar companies based on the strength of its valuation, risk, analyst recommendations, dividends, profitability, earnings and institutional ownership.

Profitability

This table compares Meritage Homes and its rivals’ net margins, return on equity and return on assets.

	Net Margins	Return on Equity	Return on Assets
Meritage Homes	5.79%	6.69%	4.50%
Meritage Homes Competitors	-2.75%	-17.14%	1.17%

Valuation and Earnings

This table compares Meritage Homes and its rivals top-line revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Meritage Homes	$5.86 billion	$453.01 million	14.53
Meritage Homes Competitors	$5.33 billion	$313.99 million	8.51

Meritage Homes has higher revenue and earnings than its rivals. Meritage Homes is trading at a higher price-to-earnings ratio than its rivals, indicating that it is currently more expensive than other companies in its industry.

Institutional & Insider Ownership

98.4% of Meritage Homes shares are held by institutional investors. Comparatively, 53.6% of shares of all “Household Durables” companies are held by institutional investors. 2.5% of Meritage Homes shares are held by company insiders. Comparatively, 18.3% of shares of all “Household Durables” companies are held by company insiders. Strong institutional ownership is an indication that endowments, large money managers and hedge funds believe a stock will outperform the market over the long term.

Dividends

Meritage Homes pays an annual dividend of $1.92 per share and has a dividend yield of 3.0%. Meritage Homes pays out 43.3% of its earnings in the form of a dividend. As a group, “Household Durables” companies pay a dividend yield of 4.2% and pay out 32.5% of their earnings in the form of a dividend. Meritage Homes has increased its dividend for 2 consecutive years. Meritage Homes lags its rivals as a dividend stock, given its lower dividend yield and higher payout ratio.

Analyst Ratings

This is a breakdown of recent ratings and target prices for Meritage Homes and its rivals, as reported by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	2	8	4	0	2.14
Meritage Homes Competitors	1803	7415	8146	316	2.39

Meritage Homes currently has a consensus price target of $72.78, suggesting a potential upside of 13.03%. As a group, “Household Durables” companies have a potential upside of 48.37%. Given Meritage Homes’ rivals stronger consensus rating and higher possible upside, analysts clearly believe Meritage Homes has less favorable growth aspects than its rivals.

Risk and Volatility

Meritage Homes has a beta of 1.31, suggesting that its stock price is 31% more volatile than the S&P 500. Comparatively, Meritage Homes’ rivals have a beta of 1.77, suggesting that their average stock price is 77% more volatile than the S&P 500.

Summary

Meritage Homes rivals beat Meritage Homes on 8 of the 15 factors compared.

Meritage Homes Company Profile

Meritage Homes Corporation, together with its subsidiaries, designs and builds single-family attached and detached homes in the United States. The company operates through two segments, Homebuilding and Financial Services. It acquires and develops land; and constructs, markets, and sells homes for entry-level and first move-up buyers in Arizona, California, Colorado, Utah, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee. The company also offers title and escrow, mortgage, insurance, and closing/settlement services to its homebuyers. Meritage Homes Corporation was founded in 1985 and is based in Scottsdale, Arizona.