UK Markets closed

Meritage Homes Corporation (MEY.F)

Frankfurt - Frankfurt Delayed price. Currency in EUR
Add to watchlist
86.50+2.00 (+2.37%)
At close: 08:05AM CEST

Yahoo Finance will soon be upgrading our Conversations message board platform to provide a better experience for our users. Only comments published since April 21, 2021 will be visible on Yahoo Finance after the upgrade. If you wish to download and save any of your older comments, please submit a request via the Privacy Dashboard by no later than Aug. 15, 2022.

Sign in to post a message.
  • s
    sohbat
    Meritage Homes will be announcing its earnings results after the market closes on Wednesday, July 27th. Analysts expect the company to announce earnings of $5.86 per share for the quarter.

    last quarterly earnings results they reported $5.79 earnings per share beating analysts’ consensus estimates of $4.68 by $1.11, or nearly 25%.
  • T
    TraderJeff
    Based on today’s closing price this has a forward PE of 7.6 given management’s estimate of 2021 earnings at $14.00 per share . That definitely qualifies as undervalued . Add in the YTY growth and in this market this should be trading from $120-$140 now .
  • v
    violet
    Getting ridiculous! Below $85 is at book value today, 20% discount to year end BV. 3.5X PE. Despite community count growing from 200 to 300 (by mid year) over the past 18 months, and nearly flawless execution by the company despite a turbulent operating environment. The company has been planning for higher rates and is rolling out a sub-$400k product in larger communities across the best housing markets in the country with a heavy emphasis on TX and AZ.

    The balance sheet is strong with $600 mil in cash and $1.1 bil in debt. Reasonable relative to $900 mil in after tax earnings. $2 bil in land spend should still produce some level of FCF, although I wouldn’t mind the company dialing back growth a bit and buying back stock at these levels instead. Less land spend means more FCF. If MTH just replaced the land it sold houses on and didn’t grow the lot count it would generate $500mil+ in FCF, or 1/6 of its current mkt cap.

    Is the supplied constrained, record low inventory housing market really about to collapse because mortgage rates are at 4.5%? There is little existing inventory and rent growth is through the roof. Wages are up a lot and jobs appear plentiful…so people can afford to pay more for housing.

    This stock is trading like there is a crash around the corner and there is nothing the company can do to adjust its business to prepare for it.

    Nobody wants to own homebuilders when the Fed is hawkish because the view is that it will eventually cause a housing crash and an economic downturn. So the valuations get sillier every day despite a fairly resilient business with high consumer demand and limited supply for the product MTH supplies.

    Ultimately BV will reach $105 at YE 2022, $125-130 at YE 2023, and $150-160 at YE 2024. At 1X BV the stock would be a double from here within 3 years.

    The downside is a housing crash that will cause EPS to turn negative. Is this likely?! Currently the company produces 25+% ROE on the back of 20% operating margins. Inventory would need to spike and buyers would need to go on strike for that to happen. Demographics and the current supply situation makes this scenario unlikely. Also…Presumably management would adjust to this scenario by limiting land spend and start focusing on cash generation. Steve Hilton has been through this before and knows the playbook.

    So I don’t know what the catalyst is to get the stock back to a reasonable valuation but ultimately this insanity will end because EPS power will be maintained despite higher rates and BV will continue to migrate higher with significant cash flow generation relative to the current mkt cap ultimately causing SOMEONE to stand up and notice.
  • R
    Raylan
    I dont understand the dip heading into earnings - was thinking of buying in, fundamentals are good, country still in housing shortage, lots of good reasons including new 3D printing housing technology reduces build costs by 50%+ - would not know that from recent SP. Thoughts why this is dropping heading into earnings?
  • W
    William
    Heard a piece on CNBC about homebuilders and they were talking about rising interest rates hurting them. Wait what? Rates are at historic lows. Even if they go up a full point from here rates are still really low!
  • T
    TraderJeff
    Looking ahead just a few hours to the ER - I can’t help but think that Meritage will blow the socks off the expectations . Guidance should likewise be very strong . The housing market is red hot and MTH is hotter . This has the potential of being a $120 stock . Soon .
  • R
    Ryan @ Wantfi.com
    I bought some of this today. Overall looks pretty solid and I think with the WFH trend and their markets are fast growing markets. Backlog increased significantly. I think this could continue to do well. Rising 10 year seems to be the biggest risk, but mortgage rates are still historically low. Even if the earnings reverts to 3 year average, the P/E would still be cheap under 12. Technical formation looks solid, just recently bounced off the 50 WMA. Seems to be basing since November.
  • W
    Whognu
    This home builder seems posed for a move up. Any thoughts from those that have some good information about the company?
  • D
    Darrell
    The only “negative” was that the guidance is for revenues in 2021 to be the same as 2020, so no growth.... Seems a bit much to drop like this though...
  • D
    Darrell
    Anticipated revenues for 2021, from the ER from the company, estimated at $4.2 to $4.6 billion which is what it was in 2020. I assume that’s why it’s going down, revenues anticipated to be flat so no growth...
  • D
    Drive
    2021 EPS $18-$20. WOW. UNDERVALUED!!!
  • D
    Drive
    Ok I have to chime in... Surprised by the dramatic pull back today. Seems overdone. Especially w housing in totality. They seemed over cautious on the conference call about 2021.
    Thoughts on 21 from anyone ?
  • K
    Kew
    Very solid market, builders giving no incentives and buyers paying gladly. Now large corporates have given blessing to majority of workforce to work remotely indefinitely, so what do you think is going to happen the next several years.
  • T
    TraderJeff
    Just a side note about Zacks - Meritage ran up to $120 ranked as a 3 - got bumped up to a 1 and has dropped down now around $97 . That doesn’t inspire much confidence in their much ballyhooed proprietary system LMAO .
  • D
    Drive
    Wow! getting plummeted. No reason. Builders have nothing to worry about right now
  • D
    Drive
    Most undervalued builder stock at the moment. $144 SP
  • D
    Drive
    NO reason for this to be down. Lazy investors not doing their DD and trading this like every other builder. MTH is superior to every other builder.
  • D
    Drive
    After listening to conf calls and reviewing builders YTD financials there are three builder that I see as being SEVERELY undervalued. MTH being #1. $160. HOV # 2 $175. MHO # 3 $95 and after listening to KBH call just recently I'll throw them in there $55. Of all the industries and insane p/e ratios builders are in in a great position. IMO.
  • T
    TraderJeff
    I find it interesting that Zacks has gone from having MTH rated a 3-Hold before it ran up to $120 then rated it a 1-Strong Buy after it ran down to the high 80’s - low 90’s and now has it as a 5-Strong Sell after its blockbuster ER & guidance . Has Zacks lost its collective mind ?