Meritage HomesFRA:MEY +1.55%79 Operating Margin % is 5.88% as of Mar. 2026, which is 44% below its 10-year median of 10.48. GuruFocus rates FRA:MEY with a GF Score™ of 79/100 and a GF Value™ of €54.84 (Modestly Overvalued). The stock has 10 warning signs investors should review. Among 91 Homebuilding & Construction companies, Meritage Homes ranks better than 52.75% on this metric.
Meritage Homes Corp operating margin has been in a 5-year decline. The average rate of decline per year is -6.2%.
The historical rank and industry rank for Meritage Homes's Operating Margin % or its related term are showing as below:
FRA:MEY'
s Operating Margin % Range Over the Past 10 Years
Min: 7.01 Med: 10.48 Max: 20.43
Current: 8.11
FRA:MEY's Operating Margin % is ranked better than 52.75% of 91
companies
in the Homebuilding & Construction industry
Industry Median: 7.76
vs FRA:MEY: 8.11
Meritage Homes's 5-Year Average Operating Margin % Growth Rate was -6.20% per year.
Meritage Homes (FRA:MEY) Operating Margin % Explanation
Just like Gross Margin %, it is important to see a company maintains its operating margin over time. Among the same industry, a company with higher operating margin is more efficient in its operation. It is also more stable during industry slowdown or recessions. Peter Lynch prefers those with higher margins than those with lower margins.
Be Aware
Operating Margin % can be manipulated by adjusting the rate of depreciation, depletion and amortization (DDA).
If a company is facing competition, its Operating Margin % may decline. Often the Operating Margin % declines well before the company's Revenue or even profit decline. Therefore, Operating Margin % is a very important indicator of whether the company is facing problems.
For instance, by 2012, Nokia (NOK)'s problems were well known and its stock had lost more than 90% of its market value since 2007. But Nokias Operating Margin % had already been in decline since 2002, although its Earnings per Share (Diluted) were still rising. Investors who paid attention to Operating Margin % would have avoided this huge loss. The same can be said for Research-in-Motion (RIMM).
Therefore, Operating Margin % is a very important screening filter for GuruFocus. GuruFocus's Buffett-Munger screener requires that the profit margin is either consistent or expanding. The Model Portfolio of the Buffett-Munger screener has outperformed the market every year since inception in 2009.
Meritage Homes Operating Margin % Related Terms
Meritage Homes Operating Margin % Historical Data
* Premium members only.
The historical data trend for Meritage Homes's Operating Margin % can be seen below:
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
FRA:MEY vs CVCO, SKY, MHO: Operating Margin % Comparison
For the Residential Construction subindustry, Meritage Homes's Operating Margin %, along with its competitors' market caps and Operating Margin % 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 Operating Margin % vs Homebuilding & Construction Industry
For the Homebuilding & Construction industry and Consumer Cyclical sector, Meritage Homes's Operating Margin % distribution charts can be found below:
* The bar in red indicates where Meritage Homes's Operating Margin % falls into.
Operating Margin % - also known as operating income margin, operating profit margin and return on sales (ROS) - is the ratio of Operating Income divided by net sales or Revenue, usually presented in percent.
Meritage Homes's Operating Margin % for the fiscal year that ended in Dec. 2025 is calculated as
* For Operating Data section: All numbers are indicated by the unit behind each term and all currency related amount are in USD. * For other sections: All numbers are in millions except for per share data, ratio, and percentage. All currency related amount are indicated in the company's associated stock exchange currency.
Meritage Homes (FRA:MEY) has a Operating Margin % of 5.88% as of Mar. 2026. Operating margin is the ratio of total operating income to net sales. View historical data on Meritage Homes and its competitors. This is 44% below median its historical median of 10.48. Over the past decade, Meritage Homes' Operating Margin % has ranged from 7.01 to 20.43. According to the industry distribution chart, Meritage Homes ranks #43 out of 91 companies in the Homebuilding & Construction industry, placing it in the top 47.3%.
Is Meritage Homes' Operating Margin % too high?
Meritage Homes' current Operating Margin % of 5.88% is 44% below median its 10-year median of 10.48. Over the past 10 years, this metric has ranged from a low of 7.01 to a high of 20.43. The Homebuilding & Construction industry median Operating Margin % is 7.76. Meritage Homes' value of 5.88% is 24.2% below this industry median. Based on the distribution chart, Meritage Homes ranks #43 out of 91 companies in the Homebuilding & Construction industry, which is above the industry midpoint. Overall, Meritage Homes has a GF Score™ of 79/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Meritage Homes' Operating Margin % compare to CVCO and SKY?
According to the Homebuilding & Construction industry distribution chart, Meritage Homes ranks #43 out of 91 companies for Operating Margin %. This puts Meritage Homes in the upper half of its industry. The industry median Operating Margin % is 7.76. Meritage Homes' value of 5.88% is 24.2% below this benchmark. Historically, Meritage Homes' own Operating Margin % has ranged from 7.01 to 20.43 over the past decade. While the company's 10-year median is 10.48 vs. the industry median of 7.76, Meritage Homes has consistently been below the industry average. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good Operating Margin % for a Homebuilding & Construction company?
The median Operating Margin % among Homebuilding & Construction companies is 7.76, based on 91 companies in the industry. Companies in the top quartile (top 25%) have a Operating Margin % significantly above this median, while those in the bottom quartile fall well below. However, Operating Margin % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Meritage Homes's current Operating Margin % of 5.88% is 24.2% below the industry median. Use the industry distribution chart on this page to see where any company falls relative to its peers.
What does a high Operating Margin % mean?
A high Operating Margin % can signal that a stock is expensive relative to its fundamentals. Operating margin is the ratio of total operating income to net sales. View historical data on Meritage Homes and its competitors. For the Homebuilding & Construction industry, the median Operating Margin % is 7.76 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Meritage Homes's current Operating Margin % is 5.88%, which is 44% below median its own 10-year median of 10.48. However, context matters — high-growth companies often justify higher valuations. Always evaluate alongside other metrics like GF Score™ and GF Value™.
Is Meritage Homes stock overvalued right now?
Based on GuruFocus' analysis, Meritage Homes (FRA:MEY) is currently considered Modestly Overvalued. The stock's GF Value™ is €54.84, compared to a current price of €65.50 — trading 19.4% above its estimated fair value. The current Operating Margin % is 5.88%, which is 44% below median its 10-year median of 10.48 and 24.2% below the Homebuilding & Construction industry median of 7.76. Meritage Homes' overall GF Score™ is 79/100 with 10 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is Operating Margin % calculated?
Operating Margin % is calculated from a company's financial statements. For Meritage Homes (FRA:MEY), the current Operating Margin % is 5.88% as of Mar. 2026. GuruFocus calculates this using data sourced from SEC filings and annual reports. See the calculation section and 30-year financial data on this page for the full breakdown.
Is Meritage Homes (FRA:MEY) Overvalued in 2026?
Based on GuruFocus' analysis, Meritage Homes stock appears to be overvalued.
The current stock price of €65.50 is trading 19.4% above its estimated GF Value™ of €54.84.
GuruFocus considers Meritage Homes to be Modestly Overvalued.
Key valuation signals for FRA:MEY:
Operating Margin %: 5.88% (44% below median its 10-year median of 10.48)
GF Value™: €54.84 vs. price of €65.50 (19.4% above fair value)
Industry Position: 24.2% below the Homebuilding & Construction median (#43 of 91)
No single metric tells the full story. See the FRA:MEY stock analysis page for a complete view including 30-year financials, guru trades, and insider activity.
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, comprising twelve states: Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina. 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 offers title and escrow, mortgage, and insurance services. The company generates key revenue from the Homebuilding segment.
79GF Score
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