Meritage Homes’ stock may suffer in the short term due to rising mortgage rates, but strong long-term demand should support the stock.

September 2, 2022

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Meritage Homes($NYSE:MTH) is a leading homebuilder in the United States with a strong focus on energy-efficient construction. The recent rise in mortgage rates is likely to have a negative impact on Meritage’s near-term sales and earnings. However, the long-term outlook for the housing market remains strong, with a continued shortage of new homes relative to population growth.

Market Price

Mortgage rates have been on the rise in recent weeks, hitting a four-year high. This could put pressure on homebuyers, leading to fewer sales of new homes. This is due to a combination of factors, including low unemployment, wage growth, and limited supply of homes for sale. Meritage Homes is one of the largest homebuilders in the U.S., with a strong presence in high-growth markets.

VI Analysis

The company’s fundamentals reflect its long-term potential, and the VI app makes it easy to analyze them. According to the VI Star Chart, MERITAGE HOMES is classified as a “gorilla,” a type of company that has achieved stable and high revenue or earnings growth due to its strong competitive advantage. High-growth companies are generally considered more risky because they are trying to grow faster. However, MERITAGE HOMES has an intermediate health score of 6/10 with regard to its cash flows and debt, indicating that it is likely to safely ride out any crisis without the risk of bankruptcy. In terms of its key financial indicators, MERITAGE HOMES is strong in assets, growth, and medium in profitability and weak in dividend.


The company’s focus on energy-efficient homes could help it weather the storm, as higher mortgage rates could lead to slower growth in the housing market. Overall, Meritage Homes is a well-positioned company that should be able to weather the current market conditions and emerge stronger in the long run.

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