S&P ups Meritage Homes outlook to positive

Standard & Poor's said it affirmed the BB- corporate credit and senior unsecured note ratings assigned to Meritage Homes Corp. and revised the outlook to positive from stable.

S&P said the outlook revision reflects this rapidly growing regional homebuilder's improved profitability and stronger interest coverage measures. Higher inventory turnover has produced free operating cash flow, which has enabled Meritage to aggressively grow its operating platform and reduce relative debt levels.

However, the company's larger sales base and a cooling housing environment may limit leverage-neutral growth opportunities in the future, the agency noted.

Debt to EBITDA was 1.5x at Dec. 31.

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