Contrasting Meritage Homes (MTH) and Its Competitors

Meritage Homes (NYSE:MTH) is one of 150 publicly-traded companies in the “Household Durables” industry, but how does it weigh in compared to its peers? We will compare Meritage Homes to related businesses based on the strength of its valuation, profitability, dividends, institutional ownership, analyst recommendations, risk and earnings.

Earnings and Valuation

This table compares Meritage Homes and its peers revenue, earnings per share and valuation.

	Gross Revenue	Net Income	Price/Earnings Ratio
Meritage Homes	$5.86 billion	$453.01 million	16.00
Meritage Homes Competitors	$130.89 billion	$313.99 million	9.46

Meritage Homes’ peers have higher revenue, but lower earnings than Meritage Homes. Meritage Homes is trading at a higher price-to-earnings ratio than its peers, indicating that it is currently more expensive than other companies in its industry.

Dividends

Meritage Homes pays an annual dividend of $1.92 per share and has a dividend yield of 2.7%. 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 4.1% and pay out 32.6% of their earnings in the form of a dividend. Meritage Homes has increased its dividend for 2 consecutive years. Meritage Homes lags its peers as a dividend stock, given its lower dividend yield and higher payout ratio.

Profitability

This table compares Meritage Homes and its peers’ 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	-2.57%	-17.04%	1.23%

Institutional & Insider Ownership

98.4% of Meritage Homes shares are owned by institutional investors. Comparatively, 53.6% of shares of all “Household Durables” companies are owned by institutional investors. 2.5% of Meritage Homes shares are owned by insiders. Comparatively, 18.3% of shares of all “Household Durables” companies are owned by 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.

Risk and Volatility

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

Analyst Ratings

This is a summary of current ratings and target prices for Meritage Homes and its peers, as provided by MarketBeat.

	Sell Ratings	Hold Ratings	Buy Ratings	Strong Buy Ratings	Rating Score
Meritage Homes	2	8	4	0	2.14
Meritage Homes Competitors	1811	7438	8164	316	2.39

Meritage Homes currently has a consensus target price of $72.44, suggesting a potential upside of 2.19%. As a group, “Household Durables” companies have a potential upside of 40.16%. Given Meritage Homes’ peers stronger consensus rating and higher probable upside, analysts clearly believe Meritage Homes has less favorable growth aspects than its peers.

Summary

Meritage Homes peers beat Meritage Homes on 9 of the 15 factors compared.

About Meritage Homes

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.