| Factor | Score | Distribution | Value | Avg | Rank |
|---|---|---|---|---|---|
Valuation | 85 | 13.4x | 17.8x | Top tier | |
Growth | 10 | -12.3% | 7.1% | Bottom tier | |
Quality | 44 | 5.1% | 4.5% | Around median | |
Safety | 78 | 2.0x | 2.6x | Top tier | |
Capital Return | 80 | 2.72% | 2.12% | Top tier | |
Momentum | 31 | -0.1% | 2.9% | Bottom tier | |
Sentiment | 67 | 9 | 3 | Top tier |
Estimates — analyst targets and a simplified DCF, not investment advice.
Ten ratios that matter, each compared against its sector median and average — so you can see whether a number is rich or cheap relative to peers in the same sector.
Meritage Homes Corporation builds and sells homes, with a primary focus on first-time buyers and first move-up buyers. Its operating model relies on starting construction in advance, offering move-in-ready homes, limiting the number of options and designs, and accelerating sales and closings within 60 days; therefore, its income comes primarily from home closing revenue. In Q2 FY2026, about 10% of activity was directed toward the first move-up buyer segment, while the company’s long-term target is a mix of approximately one-third for this segment and two-thirds for the entry-level segment, with the broader financial impact of this shift beginning in 2029 and beyond.
In Q2 FY2026, the company closed the sale of 3.73 thousand homes and generated $1.4 billion in home closing revenue, down 14% year over year due to an 11% decline in closing volume and a 4% decrease in the average closing price to $373 thousand. Home closing gross margin was 18.3%, compared with 21.1% a year earlier, while adjusted margin was 18.6% after excluding $3.6 million of real estate inventory impairments and approximately $300 thousand of costs related to withdrawing from land deals. Diluted earnings per share were $1.37, down 33% year over year, and were $1.42 on an adjusted basis.
The operating mix in Q2 FY2026 showed weak demand offset by improved inventory and cost controls. Orders declined 9% year over year to 3.58 thousand homes, but the number of active communities increased 9% to 340 communities, while direct construction cost per square foot decreased by approximately 6%. For the first half of FY2026, revenue declined 16% to $2.5 billion and net income fell 46% to $146 million, demonstrating that community growth and construction efficiency have not yet offset the impact of lower volume and elevated incentives.
Automated analysis for informational purposes only — not investment advice.
The analyst consensus is Buy, with an average price target of $87, a high of $93, and a low of $80. The average target is slightly above the 52-week high of $85.38, while the data do not include a usable earnings multiple; therefore, the valuation rationale depends primarily on recovering volume and margins, weighed against a 16% decline in first-half FY2026 revenue and a 46% decrease in net income.
Figures in the text are as of 2026-08-30; the live price is shown at the top of the page.
Meritage Homes relies on building homes in advance and offering move-in-ready units instead of providing extensive customization for each buyer. The company maintained a construction cycle of less than 110 days for five consecutive quarters and uses a 60-day closing guarantee to convert demand into revenue quickly. In Q2 FY2026, the company closed 3.73 thousand homes and generated $1.4 billion in home closing revenue.
Home closing revenue declined 14% year over year due to an 11% decrease in closing volume and a 4% decline in the average closing price to $373 thousand. Gross margin also declined to 18.3% from 21.1% due to weaker fixed-cost leverage and higher land costs, despite improved direct construction costs. As a result, diluted earnings per share fell 33% to $1.37, or $1.42 after excluding inventory impairments and costs related to withdrawing from land deals.
Management expects to close between 3.3 and 3.6 thousand homes during Q3 FY2026. Expected home closing revenue ranges between $1.26 billion and $1.35 billion, with a gross margin of approximately 18%. It also expects diluted earnings per share between $1.10 and $1.30, with margins sensitive to closing volume, mortgage rates, and incentive costs.
Spec home inventory totaled approximately 5.1 thousand homes on June 30, 2026, down 27% year over year and equivalent to approximately four months of supply. The number of completed homes declined 42% to 1.5 thousand homes, representing 30% of total inventory compared with 46% in Q1 FY2026. At the same time, the company started construction on approximately 3.9 thousand homes during the quarter to ensure unit availability for new communities and second-half closings.
Approximately 10% of Meritage Homes’ activity was directed toward the first move-up buyer segment at the Q2 FY2026 earnings call, while the company is targeting a long-term mix of approximately one-third for this segment and two-thirds for the entry-level segment. The company plans to offer wider homes and some higher-quality finishes while maintaining its standardized construction model and avoiding design studios or extensive customization. Management expects most of the shift to come from new land and its broader income statement impact to appear in 2029 and beyond.
On June 30, 2026, the company had $87 million in cash and no outstanding borrowings under its credit facility, while its net debt-to-capital ratio was 17.1%. Meritage Homes returned $131 million to shareholders in Q2 FY2026, including $100 million to repurchase more than 1.5 million shares and $31 million in cash dividends. It also increased its quarterly cash dividend 12% year over year to $0.48 per share, and $284 million remained available under the repurchase program on June 30, 2026.
