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.
Peer comparison
Dec 31, 2023