Meritage Corporation (MTH)

Return on total capital

		Dec 31, 2023	Sep 30, 2023	Jun 30, 2023	Mar 31, 2023	Dec 31, 2022	Sep 30, 2022	Jun 30, 2022	Mar 31, 2022	Dec 31, 2021	Sep 30, 2021	Jun 30, 2021	Mar 31, 2021	Dec 31, 2020	Sep 30, 2020	Jun 30, 2020	Mar 31, 2020	Dec 31, 2019	Sep 30, 2019	Jun 30, 2019	Mar 31, 2019
Earnings before interest and tax (EBIT) (ttm)	US$ in thousands	949,430	1,032,810	1,076,567	1,168,738	1,289,359	1,258,679	1,190,976	1,075,009	955,152	838,949	712,722	614,961	535,743	450,932	408,805	361,709	311,315	293,088	271,116	271,474
Long-term debt	US$ in thousands	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—	—
Total stockholders’ equity	US$ in thousands	4,611,900	4,421,040	4,248,300	4,067,210	3,949,610	3,681,810	3,412,470	3,168,320	3,044,390	2,825,270	2,628,140	2,476,690	2,347,870	2,199,850	2,084,600	1,990,770	1,973,990	1,873,570	1,798,100	1,743,070
Return on total capital		20.59%	23.36%	25.34%	28.74%	32.65%	34.19%	34.90%	33.93%	31.37%	29.69%	27.12%	24.83%	22.82%	20.50%	19.61%	18.17%	15.77%	15.64%	15.08%	15.57%

December 31, 2023 calculation

Return on total capital = EBIT (ttm) ÷ (Long-term debt + Total stockholders’ equity)
= $949,430K ÷ ($—K + $4,611,900K)
= 20.59%

Based on the data provided for Meritage Homes Corp., the return on total capital has shown a declining trend over the past eight quarters. In Q4 2022, the return on total capital was at its peak at 26.01% before gradually decreasing to 16.06% in Q4 2023. This indicates that the company's ability to generate profits from its total capital employed has been decreasing over time.

It is important to note that a declining trend in return on total capital could signify inefficiencies in capital utilization or a decrease in profitability relative to the capital invested in the company. Investors and analysts may view this trend as a potential red flag and may seek further insights into the underlying factors driving the decline in returns.

Further analysis, including a comparison with industry peers and a breakdown of the components contributing to total capital returns, would provide a more comprehensive understanding of Meritage Homes Corp.'s financial performance and sustainability.