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Meritage Homes Corporation (MTH) vs Toll Brothers Inc. (TOL)

Meritage Homes Corporation and Toll Brothers Inc. are both Residential Construction companies. Toll Brothers Inc. is the larger, with a market value of $13.3B against $4.2B — 3.2× the size. Toll Brothers Inc. trades at the lower P/E: 11.7× against 13.4×. Toll Brothers Inc. grew revenue faster over the last twelve months: −1.08% against −13.3%. Toll Brothers Inc. has the higher net margin (11.1% vs 6.11%) and the higher return on invested capital (9.08% vs 3.99%). Both pay a dividend; Meritage Homes Corporation yields more (2.90% vs 0.70%). Across the 23 metrics below, Toll Brothers Inc. leads on 17 and Meritage Homes Corporation on 6.

Valuation

Metric MTH TOL Residential Construction median
P/E 13.40 11.68 13.85
P/S 0.79 1.28 1.24
P/B 0.84 1.61 1.25
Price to free cash flow 10.21 12.61 17.14
EV/EBITDA 12.78 9.76 11.19
EV/Sales 0.98 1.44 1.33
Earnings yield 7.46% 8.56% 7.02%
Free cash flow yield 9.79% 7.93% 5.75%

Profitability

Metric MTH TOL Residential Construction median
Gross margin 18.12% 23.75% 22.60%
Operating margin 7.22% 13.84% 9.03%
Net margin 6.11% 11.14% 7.30%
Free cash flow margin 7.70% 10.13% 8.46%
Return on equity 6.38% 14.39% 11.12%
Return on assets 4.30% 8.24% 7.43%
Return on invested capital 3.99% 9.08% 6.90%

Growth

Metric MTH TOL Residential Construction median
Revenue growth (TTM) (13.27%) (1.08%) (7.28%)
EPS growth (last fiscal year) (40.77%) (10.13%) (25.22%)
Revenue growth, 5-year CAGR 5.41% 9.15% 8.74%
Net income growth, 5-year CAGR 1.36% 24.70% 8.60%

Health

Metric MTH TOL Residential Construction median
Debt to equity 0.37 0.32 0.20
Current ratio 1.97 4.53 3.53
Net debt to EBITDA 1.86 0.85 0.28

Dividend

Metric MTH TOL Residential Construction median
Dividend yield 2.90% 0.70% 1.23%
Payout ratio 0.39 0.08 0.17

Size

Metric MTH TOL Residential Construction median
Market cap 4.20b 13.29b 4.20b

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