UBS has revised its price target for Meritage Homes (MTH, Financial), reducing it from $118 to $107 while maintaining a Buy rating for the shares. The adjustment comes after a well-executed first quarter for the home-building company. Despite the lowered target, UBS analysts believe Meritage Homes still presents a significant upside opportunity for investors.
Wall Street Analysts Forecast
Based on the one-year price targets offered by 8 analysts, the average target price for Meritage Homes Corp (MTH, Financial) is $95.20 with a high estimate of $118.00 and a low estimate of $70.00. The average target implies an upside of 38.12% from the current price of $68.92. More detailed estimate data can be found on the Meritage Homes Corp (MTH) Forecast page.
Based on the consensus recommendation from 12 brokerage firms, Meritage Homes Corp's (MTH, Financial) average brokerage recommendation is currently 2.7, indicating "Hold" status. The rating scale ranges from 1 to 5, where 1 signifies Strong Buy, and 5 denotes Sell.
Based on GuruFocus estimates, the estimated GF Value for Meritage Homes Corp (MTH, Financial) in one year is $71.24, suggesting a upside of 3.37% from the current price of $68.92. GF Value is GuruFocus' estimate of the fair value that the stock should be traded at. It is calculated based on the historical multiples the stock has traded at previously, as well as past business growth and the future estimates of the business' performance. More detailed data can be found on the Meritage Homes Corp (MTH) Summary page.
MTH Key Business Developments
Release Date: January 30, 2025
- Home Deliveries: 4,044 homes in Q4 2024.
- Home Closing Revenue: $1.6 billion in Q4 2024.
- Gross Margin: 23.2% for Q4 2024.
- SG&A Leverage: 10.8% for Q4 2024.
- Diluted EPS: $4.72 for Q4 2024.
- Annual Closing Volume: 15,611 homes for full year 2024.
- Annual Closing Revenue: $6.3 billion for full year 2024.
- Annual Gross Margin: 24.9% for full year 2024.
- Return on Equity (ROE): 16.1% for 2024.
- Annual EBITDA: Over $1 billion for each of the last three years.
- Backlog Conversion Rate: 177% as of December 31, 2024.
- Share Repurchase: Nearly 6% of outstanding shares since 2022.
- Community Count: 292 as of December 31, 2024.
- Orders: 3,304 homes in Q4 2024.
- Average Sales Price (ASP): $400,000 for Q4 2024, down 4% year-over-year.
- Cancellation Rate: 10% for Q4 2024.
- Net Debt to Capitalization: 11.7% as of December 31, 2024.
- Cash Balance: $652 million as of December 31, 2024.
- Land Spend: $2.5 billion for full year 2024.
- Share Buybacks: $126 million spent in 2024, repurchasing over 730,000 shares.
- Guidance for Q1 2025: Closings between 3,200 and 3,500 units; Revenue of $1.26 billion to $1.40 billion; Gross margin around 22%; EPS of $1.59 to $1.83.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Meritage Homes Corp (MTH, Financial) achieved a record high closing revenue of $6.3 billion in 2024, despite a decrease in average sales price.
- The company maintained a strong home closing gross margin of 24.9% for the full year 2024, above their long-term target.
- Meritage Homes Corp (MTH) achieved a significant improvement in construction cycle times, returning to historical averages of 120 days.
- The company demonstrated a strong commitment to shareholder returns, repurchasing nearly 6% of outstanding shares since 2022 and increasing cash dividends.
- Meritage Homes Corp (MTH) expanded its market presence by entering new regions, including the Gulf Coast and Huntsville, Alabama.
Negative Points
- The company experienced a 12% year-over-year decrease in fourth quarter 2024 diluted EPS, attributed to lower home closing revenue and gross profit.
- Meritage Homes Corp (MTH) faced challenges with elevated financing incentives, impacting gross margins and average sales prices.
- The company anticipates continued elevated use of financing incentives due to the volatile mortgage rate environment.
- Meritage Homes Corp (MTH) reported a decrease in average sales price on orders due to increased financing incentives and a shift in product and geographic mix.
- The company is operating in a challenging environment with a 7% mortgage rate, which could impact future sales and margins.
