Is MTH a high-quality business?

AlphaMadera's AlphaQuality grade scores Meritage Homes Corporation on six pillars — profitability, capital efficiency, balance-sheet strength, growth durability, cash generation, and shareholder yield. The composite letter grade reflects how MTH compares to a Buffett-style quality bar.

What is Meritage Homes Corporation's AlphaQuality grade?

AlphaQuality assigns a letter grade (A through F) to MTH based on a six-pillar quantitative model. The live page shows the composite grade plus each pillar's individual score with the underlying metrics.

What makes MTH a quality stock?

AlphaQuality looks at return on capital, free-cash-flow margins, debt-to-equity, revenue stability, dividend and buyback policy, and operating-margin trend. Stocks scoring well across all six pillars earn higher grades — the methodology favors compounders over cyclicals.

MTH - Meritage Homes Corporation

Price: -- -- | CONSENSUS: Buy DETAILS | PRICE TARGET: $83.25 DETAILS

AlphaQuality

Quantitative six-pillar business-quality grade

Cyclical & Capital-Intensive

AlphaQuality — archetype-weighted quantitative grade

C 53.0 / 100 composite

Composite Grade

Composite of six pillars weighted for cyclical & capital-intensive businesses. Purely quantitative — no stock price or analyst input.

Profitability

Weight: 15%

D+ 42.6

5yr Avg ROIC 10.2% 61/100
Operating Margin Trend -2.49 pp/yr 0/100

Capital Efficiency

Weight: 15%

A- 80.8

5yr Avg ROE 14.3% 78/100
5yr Share-Count CAGR -1.9% 87/100

Growth Quality

Weight: 10%

D 33.5

5yr Revenue CAGR 3.3% 47/100
5yr EPS CAGR -9.8% 0/100
Revenue-Growth Years (5) 3/5 60/100

Cash Generation

Weight: 15%

F 20.7

5yr FCF Margin 1.1% 30/100
5yr FCF/NI Conversion 0.09x 9/100

Balance Sheet

Weight: 25%

A- 81.9

Net Debt / EBITDA 1.98x 70/100
Interest Coverage (EBIT/Int) 30.00x 100/100
Altman Z-Score 3.07 81/100

Stability

Weight: 20%

D 37.9

EPS Volatility (σ/μ) 0.70 14/100
Piotroski F-Score 5 56/100
Negative-Revenue Years (5) 2/5 60/100

2 of 2 gurus held; 2 added.

Holders: 2
Avg Δ position: +42.9%
New buys: 0
Full exits: 0

Cooperman increased +70%
Wood increased +16%

How this is calculated

AlphaQuality grades six pillars from 0-100 and weights each by archetype:

Profitability (15%) — 5yr Avg ROIC, Operating Margin Trend
Capital Efficiency (15%) — 5yr Avg ROE, 5yr Share-Count CAGR
Growth Quality (10%) — 5yr Revenue CAGR, 5yr EPS CAGR, Revenue-Growth Years (5)
Cash Generation (15%) — 5yr FCF Margin, 5yr FCF/NI Conversion
Balance Sheet (25%) — Net Debt / EBITDA, Interest Coverage (EBIT/Int), Altman Z-Score
Stability (20%) — EPS Volatility (σ/μ), Piotroski F-Score, Negative-Revenue Years (5)

We deliberately ignore stock price, analyst targets, and consensus ratings so the grade is suitable for backtesting forward returns. A minimum of 5 fiscal years of audited statements is required; distressed and highly leveraged infrastructure businesses are declared ungradable rather than forced into a numeric score.