How much a stock's price changes over time is important for most investors, since price performance can both impact your investment portfolio and help you compare investment results across sectors and industries.
FOMO, or the fear of missing out, also plays a role in investing, particularly with tech giants and popular consumer-facing stocks.
What if you'd invested in Meritage Homes (MTH) ten years ago? It may not have been easy to hold on to MTH for all that time, but if you did, how much would your investment be worth today?
Meritage Homes' Business In-Depth
With that in mind, let's take a look at Meritage Homes' main business drivers.
Based in Scottsdale, AZ, Meritage Homes Corporation is one of the leading designers and builders of single-family homes. The company primarily engages in building and selling single-family homes for entry-level, first-time, move-up, luxury and active adult buyers in historically high-growth regions of the United States.
On Dec 31, 1996, it acquired the homebuilding operations of its predecessor company through a merger. Since then, it have engaged in homebuilding and related activities and ceased to operate as a real estate investment trust. Meritage Homes operates as a holding company and has no independent assets or operations.
The company operates through two principal business segments: Homebuilding (which accounted for 99.6% of total 2022 revenues) and Financial Services (0.4%).
The Homebuilding segment engages in acquiring and developing land, constructing homes, marketing and selling these constructed homes, and providing warranty and customer services. The company has homebuilding operations in three regions, namely West, Central and East, across nine states - Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, and Tennessee.
Meritage Homes also operates Carefree Title Agency, Inc., a wholly-owned title company whose core business includes title insurance and closing/settlement services. Notably, the company’s Financial Services segment includes revenues and expenses from Carefree Title.
As of Sep 30, 2023-end, the backlog totaled 3,608 units. The value of backlog decreased 45% year over year to $1.56 billion.
Anyone can invest, but building a successful investment portfolio requires research, patience, and a little bit of risk. So, if you had invested in Meritage Homes ten years ago, you're likely feeling pretty good about your investment today.
A $1000 investment made in January 2014 would be worth $3,583.23, or a gain of 258.32%, as of January 8, 2024, according to our calculations. This return excludes dividends but includes price appreciation.
The S&P 500 rose 156.49% and the price of gold increased 60.30% over the same time frame in comparison.
Analysts are forecasting more upside for MTH too.
Shares of Meritage Homes have outperformed its industry in the year-to-date period. The company is benefiting from improved cycle times, spec strategy implementation and a normalizing housing demand environment. About 96% of the company’s backlog conversion was stimulated by the spec strategy resulting in the highest third quarter of home closings units and revenues. The company’s strategy of capitalizing on the solid demand for entry-level and first move-up homes will likely produce higher volume in the future, especially from digital communities. Earnings estimates for 2023 have increased in the past 60 days. This depicts analysts’ optimism about the stock’s prospects. However, high mortgage rates, inflation and macroeconomic risks are headwinds.Shares have gained 6.57% over the past four weeks and there have been 2 higher earnings estimate revisions for fiscal 2023 compared to none lower. The consensus estimate has moved up as well.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.