Stock Analysis

Stock Analysis · Meritage Corporation (MTH)

Overview

Meritage Corporation (MTH) is a U.S. homebuilder. In simple terms, it buys and develops land (or finished lots), builds single-family homes (and, in some markets, attached homes), and sells those homes to buyers. Like most builders, its results tend to move with housing demand, mortgage rates, build-cost conditions (materials and labor), and how quickly it can turn land into finished homes.

In its public filings, Meritage describes a strategy focused on building and selling homes in several U.S. markets, with an emphasis on standardized plans and construction processes intended to support scale and efficiency. The company also sells “options” and upgrades to buyers and may generate smaller ancillary revenue streams tied to the home sale process, but the core business remains homebuilding.

Main sources of revenue typically include:

Home sales revenue (the large majority of total revenue; this is the primary driver)
Land and lot sales (when the company sells land or lots rather than building a home on them)
Other/ancillary revenue related to the home sale process (generally smaller)

From the company’s income statement over recent years, total revenue was approximately $5.1B (2021), $6.3B (2022), $6.1B (2023), $6.4B (2024), and $5.9B (2025), showing that revenue can be strong but is not steady from year to year in this industry.

One notable recent pattern is that revenue stayed in a relatively similar range from 2022 to 2025, but profitability tightened in 2025: operating income and net income fell meaningfully versus 2024 (operating income about $958M in 2024 vs. about $537M in 2025; net income about $786M in 2024 vs. about $453M in 2025). This points to margin pressure rather than a collapse in the top line.

Key Figures

Metric	Value	Industry ⓘ
Date	Feb 08, 2026
Context
Sector	Consumer Cyclical
Industry	Residential Construction
Market Cap ⓘ	$5.34B
Beta ⓘ	1.48
Fundamental
P/E Ratio ⓘ	11.95	12.00
Profit Margin ⓘ	7.73%	8.48%
Revenue Growth ⓘ	-11.50%	-4.90%
Debt to Equity ⓘ	34.74%	34.53%
PEG ⓘ	1.28
Free Cash Flow ⓘ	$92.57M

Meritage’s market capitalization is about $5.34B. The stock’s beta of ~1.48 indicates it has tended to move more than the broader market (up and down), which is common for cyclical businesses tied to housing conditions.

On valuation, Meritage’s P/E ratio is ~12.0, close to the industry median (~12.0). Profitability and growth are currently softer than some peers on a snapshot basis: the company’s profit margin is ~7.7% versus an industry median ~8.5%, and its year-over-year revenue growth is about -11.5% versus an industry median around -4.9% (indicating a more pronounced recent slowdown than the typical company in its peer set).

Balance-sheet leverage looks similar to peers: debt-to-equity is ~35%, roughly in line with the industry median (~35%). Free cash flow over the last twelve months is about $92.6M, and the PEG ratio is ~1.28 (a metric that relates valuation to expected growth, but it can be volatile for cyclical companies because “growth” assumptions can change quickly).

Growth (Medium)

Homebuilding is a long-running industry with demand influenced by population trends, household formation, employment, consumer confidence, and especially mortgage rates. Over long periods, the need for housing tends to persist, but the path is often uneven because affordability can change quickly when rates or home prices move.

Meritage’s strategy—scaling standardized construction, operating across multiple markets, and managing land and lot positions—can support growth when demand is healthy because it aims to convert capital (land and construction spending) into finished homes efficiently. The most important “catalysts” for a builder are typically not single product launches, but broader conditions such as easing mortgage rates, improved affordability, and stable construction costs—factors that can lift orders, closings, and margins across the sector.

The recent pattern shown in revenue growth is mixed: Meritage posted strong positive growth in parts of 2021–2022, then moved through periods of slower growth and contraction, ending 2025 at roughly -11% year-over-year. For a homebuilder, this kind of swing is not unusual, but it highlights that “growth” can be cyclical rather than steady.

Free cash flow can also be lumpy in homebuilding because cash is tied up in land and homes under construction, then released when homes close. The chart shows large positive free cash flow in some periods (for example, 2021 and 2023), and negative figures in others (notably 2022 and 2025). This often reflects changes in inventory and land spend, not just profitability, but it still matters because persistent negative free cash flow can increase reliance on debt or reduce flexibility.