Lennar vs Meritage Homes

Lennar Corporation and Meritage Homes Corporation are two prominent companies in the homebuilding industry, both publicly traded on the stock market. Lennar has a long-standing reputation for building quality homes across the United States, while Meritage Homes is known for its focus on energy-efficient and sustainable building practices. Investors often compare the two stocks in terms of growth potential, financial performance, and market share within the industry. Understanding the strengths and weaknesses of each company can help investors make informed decisions when considering investing in either Lennar or Meritage Homes stocks.

Lennar or Meritage Homes?

When comparing Lennar and Meritage Homes, different investors may prioritize various metrics based on their investment strategies and goals. So, ask yourself what type of investor you are. This will guide you in determining which metrics are most important for your investment decision between Lennar and Meritage Homes.

Dividend Investors:

Dividend investors look for stable and growing income streams, using dividend metrics to assess potential investments. A company's dividend yield essentially measures the size of its dividend relative to the total market value of the company. Lennar has a dividend yield of 1.35%, while Meritage Homes has a dividend yield of 1.65%. Beyond the yield itself, considering the growth and sustainability of these dividends is also crucial. Lennar reports a 5-year dividend growth of 56.46% year and a payout ratio of 12.37%. On the other hand, Meritage Homes reports a 5-year dividend growth of 0.00% year and a payout ratio of 8.85%.

Value Investors:

Value investors focus on financial metrics to determine a stock's intrinsic value compared to its market value. The Price-to-Earnings (P/E) Ratio links stock price to a company's earnings per share, with Lennar P/E ratio at 11.91 and Meritage Homes's P/E ratio at 8.57. Another crucial valuation metric is the Price-to-Book (P/B) Ratio, which compares stock price with book value per share. Lennar P/B ratio is 1.82 while Meritage Homes's P/B ratio is 1.47.

Growth Investors:

Growth investors prioritize metrics indicative of a company's expansion potential. Focusing on top-line growth, Lennar has seen a 5-year revenue growth of 0.81%, while Meritage Homes's is 0.90%. Return on Equity (ROE) measures how effectively a company uses equity investment to generate earnings, with Lennar's ROE at 15.62% and Meritage Homes's ROE at 17.99%.

Retail Investors:

Retail investors often consider stock affordability and company familiarity. For example, day low prices are $182.60 for Lennar and $197.59 for Meritage Homes. Over the past year, Lennar's prices ranged from $102.90 to $193.80, with a yearly change of 88.34%. Meritage Homes's prices fluctuated between $109.23 and $213.98, with a yearly change of 95.90%. Brand recognition also plays a role, as familiarity with a company can influence investment decisions.