SCOTTSDALE, Ariz. - Meritage (NYSE:MTH) Homes Corporation (NYSE:MTH), a leading U.S. homebuilder, has expanded its operations to the Gulf Coast by acquiring the assets of Elliott Homes, a prominent homebuilder in the region. The announcement made today marks a significant move for Meritage, as it positions itself in Mississippi, Alabama, and the Florida panhandle markets.
The acquisition includes over 5,500 lots and is expected to initiate production in the existing entry-level communities before the year's end. Meritage Homes anticipates a significant contribution from these new operations to its 2025 results. Phillippe Lord, CEO of Meritage Homes, stated that the acquisition brings a respected team and valuable assets to the company, enhancing its strategy to offer affordable entry-level homes.
Brandon Elliott, founder and CEO of Elliott Homes, expressed pride in his team's growth and enthusiasm about leveraging Meritage's national scale to deliver quality homes affordably in the Gulf Coast markets.
Meritage Homes, established 38 years ago, has delivered over 190,000 homes and is recognized for energy-efficient building practices. The company has been awarded multiple times by the U.S. Environmental Protection Agency for its sustainability efforts.
This strategic move by Meritage Homes is the first acquisition since 2014 and is aligned with its spec building strategy. Builder Advisor Group acted as the financial advisor for Elliott Homes in this transaction.
The forward-looking statements in the press release reflect the company's expectations regarding the start of Gulf Coast production operations and its contributions in 2025. These statements are subject to market conditions and uncertainties that could cause actual results to differ.
This expansion is based on a press release statement from Meritage Homes Corporation and has not been independently verified. The company's stock and note prices may fluctuate due to various risks and uncertainties, including market conditions, material costs, and competition, among others.
In other recent news, Meritage Homes Corporation declared a quarterly dividend of $0.75 per share, scheduled to be paid to shareholders recorded by September 16, 2024. The company also reported strong second-quarter results, with a total of 3,799 homes sold, home closing revenue of $1.7 billion, and a diluted earnings per share (EPS) of $6.31. Analysts from Seaport Global Securities have downgraded Meritage Homes from Neutral to Sell due to potential challenges with the company's strategy of selling homes close to their completion date. Meanwhile, JPMorgan (NYSE:JPM) raised its price target for Meritage Homes to $210 from $198, maintaining an Overweight rating, following the company's higher-than-expected closings and homebuilding revenue in the second quarter. Evercore ISI also increased the price target for Meritage Homes shares to $257 from the previous $221, in response to the company's impressive second-quarter performance. These are among the recent developments for Meritage Homes.
InvestingPro Insights
Meritage Homes Corporation's strategic acquisition of Elliott Homes aligns well with its current financial position and market performance. According to InvestingPro data, Meritage has a market capitalization of $6.56 billion and is trading at a relatively low P/E ratio of 7.78, suggesting the stock may be undervalued compared to its earnings potential.
The company's strong financial health is evident from its revenue of $6.46 billion over the last twelve months as of Q2 2024, with a gross profit margin of 26.01%. This robust financial foundation provides Meritage with the resources to pursue expansion strategies like the Elliott Homes acquisition.
InvestingPro Tips highlight that Meritage Homes has been highly profitable over the last twelve months and operates with a moderate level of debt. These factors support the company's ability to integrate the new assets effectively and potentially realize synergies from the acquisition.
The acquisition's focus on entry-level homes in new markets aligns with an InvestingPro Tip indicating that Meritage's liquid assets exceed short-term obligations. This financial flexibility could be crucial in managing the expansion and initial production costs in the Gulf Coast region.
Investors should note that Meritage has shown a high return over the last year, with a 63.57% price total return. This performance, coupled with analysts' predictions of profitability this year, suggests that the company is well-positioned to capitalize on its expansion into the Gulf Coast markets.
For those interested in a deeper analysis, InvestingPro offers 6 additional tips that could provide further insights into Meritage Homes' investment potential.
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