ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. Meritage Homes's annualized return on invested capital (ROIC %) for the quarter that ended in Mar. 2026 was 3.21%.
As of today (2026-06-29), Meritage Homes's WACC % is 10.62%. Meritage Homes's ROIC % is 5.60% (calculated using TTM income statement data).
Meritage Homes earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Meritage Homes (FRA:MEY) ROIC % Explanation
ROIC % measures how well a company generates cash flow relative to the capital it has invested in its business. It is also called ROC %. The reason book values of debt and equity are used is because the book values are the capital the company received when issuing the debt or receiving the equity investments.
There are four key components to this definition. The first is the use of operating income or EBIT rather than net income in the numerator. The second is the tax adjustment to this operating income or EBIT, computed as a hypothetical tax based on an effective or marginal tax rate. The third is the use of book values for invested capital, rather than market values. The final is the timing difference; the capital invested is from the end of the prior year whereas the operating income or EBIT is the current year's number.
Why is ROIC % important?
Because it costs money to raise capital. A firm that generates higher returns on investment than it costs the company to raise the capital needed for that investment is earning excess returns. A firm that expects to continue generating positive excess returns on new investments in the future will see its value increase as growth increases, whereas a firm that earns returns that do not match up to its cost of capital will destroy value as it grows.
As of today, Meritage Homes's WACC % is 10.62%. Meritage Homes's ROIC % is 5.60% (calculated using TTM income statement data).
Meritage Homes earns returns that do not match up to its cost of capital. It will destroy value as it grows.
Be Aware
Like ROE % and ROA %, ROIC % is calculated with only 12 months of data. Fluctuations in the company's earnings or business cycles can affect the ratio drastically. It is important to look at the ratio from a long term perspective.
Meritage Homes ROIC % Related Terms
Meritage Homes ROIC % Historical Data
* Premium members only.
The historical data trend for Meritage Homes's ROIC % 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.
For the Residential Construction subindustry, Meritage Homes's ROIC %, along with its competitors' market caps and ROIC % 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 ROIC % vs Homebuilding & Construction Industry
For the Homebuilding & Construction industry and Consumer Cyclical sector, Meritage Homes's ROIC % distribution charts can be found below:
* The bar in red indicates where Meritage Homes's ROIC % falls into.
Note:
The Operating Income data used here is four times the quarterly (Mar. 2026) data.
The tax rate is limited to between 0% and 100%.
* 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 ROIC % of 3.21% as of Mar. 2026. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Meritage Homes and its competitors.
Is Meritage Homes' ROIC % too high?
Meritage Homes' current ROIC % is 3.21%. The Homebuilding & Construction industry median ROIC % is 4.52. Meritage Homes' value of 3.21% is 29% below this industry median. Overall, Meritage Homes has a GF Score™ of 81/100 and is considered Modestly Overvalued, reflecting its overall financial health beyond just this single metric.
How does Meritage Homes' ROIC % compare to IBP and SKY?
Meritage Homes' ROIC % of 3.21% can be compared against companies in the Homebuilding & Construction industry. The industry median ROIC % is 4.52. Meritage Homes' value of 3.21% is 29% below this benchmark. See the competitive comparison table and distribution chart on this page for a detailed peer-by-peer breakdown.
What is a good ROIC % for a Homebuilding & Construction company?
The median ROIC % among Homebuilding & Construction companies is 4.52, based on 95 companies in the industry. Companies in the top quartile (top 25%) have a ROIC % significantly above this median, while those in the bottom quartile fall well below. However, ROIC % should not be evaluated in isolation — investors should consider it alongside profitability, growth, and financial strength metrics. Meritage Homes's current ROIC % of 3.21% is 29% 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 ROIC % mean?
A high ROIC % can signal that a stock is expensive relative to its fundamentals. Return on invested capital is the ratio of current-period net income to average two-period invested capital. View historical data on Meritage Homes and its competitors. For the Homebuilding & Construction industry, the median ROIC % is 4.52 — values significantly above this may indicate overvaluation, while values below may suggest a bargain or underlying issues. Meritage Homes's current ROIC % is 3.21%. 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 €58.31, compared to a current price of €72.00 — trading 23.5% above its estimated fair value. The current ROIC % is 3.21% and 29% below the Homebuilding & Construction industry median of 4.52. Meritage Homes' overall GF Score™ is 81/100 with 11 warning signs to review. Investors should evaluate multiple metrics — including profitability, growth, and financial strength — before making a decision.
How is ROIC % calculated?
ROIC % is calculated from a company's financial statements. For Meritage Homes (FRA:MEY), the current ROIC % is 3.21% 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 €72.00 is trading 23.5% above its estimated GF Value™ of €58.31.
GuruFocus considers Meritage Homes to be Modestly Overvalued.
Key valuation signals for FRA:MEY:
ROIC %: 3.21%
GF Value™: €58.31 vs. price of €72.00 (23.5% above fair value)
Industry Position: 29% below the Homebuilding & Construction median
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.
81GF Score
Get the complete analysis for FRA:MEY
ROIC % is just one metric. See GF Value™, 30-year financials, guru trades, warning signs, and more.
Quick Browse
Personalize
Premium Gurus 
Create New Portfolio
FRA:MEY has been successfully added to your 
