What is Meritage Homes Probability of Financial Distress (%)?
Probability of Financial Distress (%) measures the probability that a company will go bankrupt in the upcoming year given its current financial position. A higher ratio indicates a larger probability of bankruptcy for the company, while a lower ratio indicates a healthier fundamental. As of today, Meritage Homes's Probability of Financial Distress (%) is 0.01%.
Like the Altman Z-Score, the PFD measures a company's bankruptcy risk. However, the main drawback of the Z-score is it does not apply to banks and insurance companies. According to Investopedia, the concept of "working capital" does not apply to banks and insurance companies, as financial institutions do not have typical current assets or current liabilities like inventories or accounts payable.
Competitive Comparison of Meritage Homes's Probability of Financial Distress (%)
For the Residential Construction subindustry, Meritage Homes's Probability of Financial Distress (%), along with its competitors' market caps and Probability of Financial Distress (%) data, can be viewed below:
* Competitive companies are chosen from companies within the same industry, with headquarter located in same country, with closest market capitalization; x-axis shows the market cap, and y-axis shows the term value; the bigger the dot, the larger the market cap. Note that "N/A" values will not show up in the chart.
Meritage Homes's Probability of Financial Distress (%) Distribution in the Homebuilding & Construction Industry
For the Homebuilding & Construction industry and Consumer Cyclical sector, Meritage Homes's Probability of Financial Distress (%) distribution charts can be found below:
* The bar in red indicates where Meritage Homes's Probability of Financial Distress (%) falls into.
Meritage Homes Probability of Financial Distress (%) Calculation
Probability of Financial Distress (%) (PFD) was developed by John Campbell, Jens Hilscher and Jan Szilagyi in their Search of Distress Risk. It measures the probability that a company will go bankrupt within the next 12 months given its current financial position.
The Probability of Financial Distress (%) was obtained by a logit probability model based on eight explanatory variables. The logit formula to compute the probability of financial distress (LPFD) is given below:
| LPFD | = | -20.12 * NIMTAAVG | + | 1.60 * TLMTA | - | 7.88 * EXRETAVG | + | 1.55 * SIGMA | - | 0.005 * RSIZE | - | 2.27 * CASHMTA | + | 0.070 * MB | - | 0.09 * PRICE | - | 8.87 |
| = | -9.01 |
The Probability of Financial Distress (%) (PFD) was then obtianed by:
| PFD | = | 1 | / | (1 + e^(-LPFD)) | * | 100% |
| = | 0.01% |
The eight explanatory variables are:
1. NIMTAAVG = Net Income to Market Total Assets
*Note that for companies reported quarterly, geometrically declining weighted quarterly Net Income data in latest four quarters are used.
2. TLMTA = Total liabilities to Market Total Assets
3. CASHMTA = Cash to Market Total Assets
For non-financial companies, CASHMTA is measured as:
4. EXRETAVG = Excess Return compared to the S&P 500
EXRETAVG is the weighted excess return compared to the S&P 500 in past 12 month. Geometrically declining weights are imposed on the monthly excess return to reflect lagged information. The weight is halved each quarter.
5. SIGMA = Standard Deviation of Daily Returns
For sigma, we use the annualized standard deviation of a company's returns over the past 92 days (or 63 trading days).
6. RSIZE = Relative Size
| RSIZE | = | log (Market Cap | / | Total Market Cap of S&P 500 companies) |
7. MB = Market to Adjusted Book Equity Ratio
8. PRICE
PRICE is measured as the log of the stock price, capped at log(15).
Meritage Homes (Meritage Homes) Business Description
Traded in Other Exchanges
Address
8800 East Raintree Drive, Suite 300, Scottsdale, AZ, USA, 85260
Meritage Homes Corp is engaged as a designer and builder of single-family attached and detached homes. It has operations in three regions: West, Central, and East, which are comprised of ten states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Utah. The company operates with two principal business segments; homebuilding and financial services. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services and the financial services segment offer title and escrow, mortgage, and insurance services. The company generates key revenue from the homebuilding segment.
Executives
| Phillippe Lord |
officer: EXECUTIVE VICE PRESIDENT |
8800 EAST RAINTREE DRIVE, SUITE 300, SCOTTSDALE AZ 85260 |
| Peter L Ax |
director |
|
| Alison Sasser |
officer: SVP - Chief Accounting Officer |
8800 E RAINTREE DRIVE, SUITE 300, SCOTTSDALE AZ 85260 |
| Hilla Sferruzza |
officer: Chief Accounting Officer |
8800 EAST RAINTREE DRIVE, SUITE 300, SCOTTSDALE AZ 85260 |
| Javier Feliciano |
officer: EVP Chief Human Resources Off |
8800 EAST RAINTREE DRIVE, SUITE 300, SCOTTSDALE AZ 85260 |
| Dennis V Arriola |
director |
162 CANCO ROAD, PORTLAND ME 04103 |
| R. Odell Michael |
director |
3111 WEST ALLEGHENY AVENUE, PHILADELPHIA PA 19130 |
| Gerald W Haddock |
director |
C/O ENSCO, 5847 SAN FELIPE, HOUSTON TX 77057 |
| Raymond Oppel |
director |
|
| Steven J Hilton |
officer: Chief Executive Officer |
6613 N SCOTTSDALE RD, SCOTTSDALE AZ 85250 |
| Clinton Szubinski |
officer: EVP - Chief Operating Officer |
8800 E RAINTREE DRIVE, SCOTTSDALE AZ 85260 |
| Malissia Clinton |
officer: EVP - Gen. Counsel, Secretary |
333 THREE D SYSTEMS CIRCLE, ROCK HILL SC 29730 |
| Louis E Caldera |
director |
C/O BELO CORP, PO BOX 655237, DALLAS TX 75265-5237 |
| C Timothy White |
officer: EVP - Gen. Counsel, Secretary |
|
| Dana Bradford |
director |
BALLANTYNE OF OMAHA INC, 4350 MCKINLEY STREET, OMAHA NE 68112 |
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