Discounted Cash Flow (DCF) Analysis Levered

Meritage Homes Corporation (MTH)

$70.27

-1.16 (-1.62%)

All numbers are in Millions, Currency in USD

Stock DCF: 128.80 | 70.27 | undervalue

Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	3,254.83	3,543.92	3,677.84	4,506.31	5,147.33	5,783.17	6,497.56	7,300.19	8,201.97	9,215.15
Revenue (%)
Operating Cash Flow	-87.13	262.20	346.82	530.36	-152.09	265.63	298.45	335.31	376.73	423.27
Operating Cash Flow (%)
Capital Expenditure	-18.10	-33.41	-24.38	-19.93	-25.66	-35.89	-40.32	-45.30	-50.90	-57.19
Capital Expenditure (%)
Free Cash Flow	-105.23	228.79	322.44	510.43	-177.76	229.75	258.13	290.01	325.84	366.09

Weighted Average Cost Of Capital

Share price	$ 70.27
Beta	1.633
Diluted Shares Outstanding	37.72
Cost of Debt
Tax Rate	22.77
After-tax Cost of Debt	0.02%
Risk-Free Rate
Market Risk Premium
Cost of Equity	11.513
Total Debt	1,186.21
Total Equity	2,650.44
Total Capital	3,836.65
Debt Weighting	30.92
Equity Weighting	69.08
Wacc

Build Up Free Cash Flow

Year A/P	2017 Actual	2018 Actual	2019 Actual	2020 Actual	2021 Actual	2022 Projected	2023 Projected	2024 Projected	2025 Projected	2026 Projected
Revenue	3,254.83	3,543.92	3,677.84	4,506.31	5,147.33	5,783.17	6,497.56	7,300.19	8,201.97	9,215.15
Operating Cash Flow	-87.13	262.20	346.82	530.36	-152.09	265.63	298.45	335.31	376.73	423.27
Capital Expenditure	-18.10	-33.41	-24.38	-19.93	-25.66	-35.89	-40.32	-45.30	-50.90	-57.19
Free Cash Flow	-105.23	228.79	322.44	510.43	-177.76	229.75	258.13	290.01	325.84	366.09
WACC
PV LFCF						145.10	151	157.15	163.54	170.20
SUM PV LFCF										1,154.22

Terminal Value

Growth in perpetuity method:
Long-term growth rate
WACC (%)	7.96
Free cash flow (t + 1)	373.41
Terminal Value	6,265.24
Present Value of Terminal Value	4,271.92

Intrinsic Value

Enterprise Value	5,426.14
Net Debt	567.87
Equity Value	4,858.27
Shares Outstanding	37.72
Equity Value Per Share	128.80