Report
Valens Research

MTH - Embedded Expectations Analysis - 2017 12 20

 Meritage Homes Corporation (MTH:USA) currently trades near historical averages relative to UAFRS-based (Uniform) Assets, with a 1.2x UAFRS-based P/B. At these levels, the market has bearish expectations for the firm, while management has concerns about their operations and margins

 Specifically, management may lack confidence in their ability to sustain gross margins at current levels through Q4 2017, and in their ability to improve gross margins next year. Moreover, they may lack confidence in their ability to improve operations by accelerating their exit from some of their lower margin, higher-priced communities
Underlying
Meritage Homes Corporation

Meritage Homes is a holding company. Through its subsidiaries, the company is engaged in designing and building single-family homes. The company provides homes that are designed with a focus on first-time and first move-up buyers. The company also operates a title company, Carefree Title Agency, Inc. (Carefree Title). Carefree Title's core business includes title insurance and closing/settlement services the company provides to its homebuyers. The company operates an insurance broker, Meritage Homes Insurance Agency (Meritage Insurance). Meritage Insurance works in collaboration with insurance companies to provide homeowners insurance and other various insurance products to its homebuyers in the markets where the company builds homes.

Provider
Valens Research
Valens Research

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