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Meritage Homes Corporation (MTH)

Company Dividend Discount ModelIndustry: Residential ConstructionSector: Consumer Cyclical

Valuation Snapshot

Stable Growth$177.14 - $472.87$271.39
Multi-Stage$120.70 - $131.89$126.19
Blended Fair Value$198.79
Current Price$72.43
Upside174.46%
DecisionBuy

Dividend History & Growth Metrics (10Y)

Metric5Y CAGR10Y CAGR2024202320222021202020192018201720162015
DPS0.00%0.00%1.510.550.000.000.000.000.000.000.000.00
YoY Growth--174.67%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%
Dividend Yield--2.13%0.64%0.00%0.00%0.00%0.00%0.00%0.00%0.00%0.00%

Stable Growth Model (Adjusted)

(USD in Millions except Per Share Data)
Net Income To Common (M)541.63
(-) Cash Dividends Paid (M)118.73
(=) Cash Retained (M)422.90
MetricLOWBASEHIGH
Required Retention Ratio20.0%12.5%7.5%
(=) Cash Required (M)108.3367.7040.62
Cash Retained (M)422.90422.90422.90
(-) Cash Required (M)-108.33-67.70-40.62
(=) Excess Retained (M)314.57355.20382.28
(/) Shares Outstanding (M)72.0972.0972.09
(=) Excess Retained per Share4.364.935.30
LTM Dividend per Share1.651.651.65
(+) Excess Retained per Share4.364.935.30
(=) Adjusted Dividend6.016.576.95
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Fair Value$177.14$271.39$472.87
Upside / Downside144.56%274.69%552.87%

Multi-Stage Model: Projections

(USD in Millions)
MetricTTMDec-27Dec-28Dec-29Dec-30Dec-31Terminal
Net Income (M)541.63576.84614.33654.26696.79742.08764.34
Payout Ratio21.92%35.54%49.15%62.77%76.38%90.00%92.50%
Projected Dividends (M)118.73204.99301.96410.67532.24667.87707.02

Multi-Stage Valuation

MetricLOWBASEHIGH
WACC / Discount Rate9.08%9.08%9.08%
Growth Rate5.50%6.50%7.50%
Year 1 PV (M)186.16187.93189.69
Year 2 PV (M)249.04253.78258.57
Year 3 PV (M)307.59316.42325.41
Year 4 PV (M)362.02375.95390.27
Year 5 PV (M)412.56432.48453.17
PV of Terminal Value (M)7,183.167,530.117,890.34
Equity Value (M)8,700.529,096.669,507.44
Shares Outstanding (M)72.0972.0972.09
Fair Value$120.70$126.19$131.89
Upside / Downside66.64%74.22%82.09%

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