MTH - Meritage Homes: Massive Cash Generation Should Create Value And Endless Opportunities

• Meritage is about to generate a substantial amount of cash over the next few years. I am estimating $2B in FCF from 2021 to 2023.
• With only a $3.7B Enterprise Value, Meritage either has to put that cash to work with a massive share buyback, or they become a takeover target.
• Recent updates from other builders, with upward revisions to margin, support my previous call for Meritage to earn $24 per share in FY 2022 and up to $30 in 2023.
• Falling lumber prices (accretive to margin) and falling interest rates (supporting current home prices) are further validating the prior thesis on earnings potential.

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