Back to top

Analyst Blog

With the housing market recovery expected to gain further traction in 2014 and buyers adjusting to higher mortgage rates and increased home prices, most homebuilding companies are maintaining a strong liquidity position to increase investments and capitalize on the housing momentum.  

One of the homebuilding companies, Meritage Homes Corporation (MTH - Snapshot Report) recently offered 2,200,000 shares of its common stock. On Jan 10, The company priced the stock offering at $95.9 million or $45.75 per share. The company plans to use the proceeds from the offering for expansion in new or existing markets, which includes acquisitions and for other general corporate purposes.

Meritage Homes recently reported preliminary results for the fourth quarter and fiscal 2013, the full results of which are slated to be released on Feb 05. The company expects double-digit increase in home closing revenues; number of homes closed, net order and order value in the fourth quarter and fiscal 2013. The company also expects significant increase in home closing gross margin during the period.

The company has been witnessing strong top-line growth and margin expansion for the past few quarters. However, the sales pace of the company has slowed down recently owing to headwinds like recent spike in mortgage rates, rising home prices, tight credit availability and the political uncertainty in Washington. The recent increase in cash will help the company improve its inventory by building more homes thus, strengthening its position in the upcoming quarter.

Meritage Homes Corporation currently carries a Zacks Rank #3 (Hold).

However, some better-ranked stocks in the homebuilding sector include Beazer Homes USA Inc. (BZH - Snapshot Report), Toll Brothers, Inc. (TOL - Analyst Report) and Standard Pacific Corp. (SPF - Snapshot Report). All the three companies carry a Zacks Rank #2 (Buy).
 

Please login to Zacks.com or register to post a comment.