Meritage Homes Corporation (MTH - Free Report) reported fourth-quarter 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.91 per share surpassed the consensus mark of $1.51 by 20.5%. Notably, the reported figure also increased 120% on a year-over-year basis. The positive performance was primarily backed by strong demand of entry-level homes.
Meritage Corporation Price, Consensus and EPS Surprise
Revenue Discussion
Homebuilding: Revenues in the Homebuilding segment increased 6.6% from the prior-year quarter to $1,008.8 million. Home closing revenues grew 8% year over year to $996.1 million, aided by 11% higher home deliveries. However, land closing revenues were $12.7 million, down from $23.1 million a year ago.
Home closings of 2,505 homes grew 11% year over year, backed by higher deliveries throughout the regions served by the company expect California. Home deliveries in California declined 21% due to lower absorption and fewer communities on average compared with the year-ago quarter. Also, average sales price was 3% lower than the prior-year level, mainly due to a shift toward more entry-level homes.
Total orders decreased 8% from the year-ago period to 1,653 homes. The value of net orders fell 15% year over year to $644.2 million.
Financial Services segment revenues increased 8.6% from the prior-year level to $4.4 million.
Margins
Home sales gross margin increased to 19%, up 80 basis points (bps) from the prior-year figure of 18.2%. Notably, the said figure is the highest since 2015. Higher efficiencies in operations and cost-control measures resulted in higher margins during the quarter.
Selling, general and administrative expenses, as a percentage of home closing revenues, were up 20 bps to 10.6% due to additional marketing costs and sales commissions during the quarter.
Pre-tax earnings came in at $91.8 million, reflecting an increase of 9% from the year-ago period.
Balance Sheet
As of Dec 31, 2018, cash and cash equivalents totaled $311.5 million compared with $170.7 million on Dec 31, 2017. The upside was backed by a reduction of $209 million in total land and development spending in 2018. The reduction was mainly due to lower average cost of new entry-level lots and reduced spending.
Meanwhile, the company repurchased and retired approximately $2.58 million of its common stock under the share repurchase authorization of $100 million.
Debt-to-capital ratio of the company reduced to 43.2% as of Dec 31, 2018 from 44.9% on Dec 31, 2017. Also, net debt-to-capital ratio decreased to 36.7% from 41.4% in the said time frames.
2018 Highlights
Meritage Homes’ full-year 2018 adjusted earnings of $5.58 per share surpassed the consensus estimate of $5.22 by 6.9%. Also, the said figure increased 64% on a year-over-year basis.
Total home closing revenues amounted to $3.47 billion, reflecting a 9% year-over-year increase. Home deliveries during the year grew 11% from the year-ago level to 8,531 homes. However, home order value decreased 2% from a year ago. Home closing gross margin improved 60 bps to 18.2% in 2018.
Total orders grew 2% from the prior-year level to 8,089 in the full year of 2018, however, value of net orders fell 2% to $3,240 million. Meanwhile, pre-tax earnings improved 14% from a year ago to $283.3 million.
Zacks Rank & Key Picks
Currently, Meritage Homes carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Construction sector include Gates Industrial Corporation PLC (GTES - Free Report) , Lennox International Inc. (LII - Free Report) , and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gates Industrial, Lennox and Great Lakes’ earnings for the current year are expected to increase 44.6%, 18.9% and 111%, respectively.
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Meritage Homes Corporation (MTH - Free Report) reported fourth-quarter 2018 results, wherein both earnings and revenues surpassed the Zacks Consensus Estimate. Adjusted earnings of $1.91 per share surpassed the consensus mark of $1.51 by 20.5%. Notably, the reported figure also increased 120% on a year-over-year basis. The positive performance was primarily backed by strong demand of entry-level homes.
Meritage Corporation Price, Consensus and EPS Surprise
Revenue Discussion
Homebuilding: Revenues in the Homebuilding segment increased 6.6% from the prior-year quarter to $1,008.8 million. Home closing revenues grew 8% year over year to $996.1 million, aided by 11% higher home deliveries. However, land closing revenues were $12.7 million, down from $23.1 million a year ago.
Home closings of 2,505 homes grew 11% year over year, backed by higher deliveries throughout the regions served by the company expect California. Home deliveries in California declined 21% due to lower absorption and fewer communities on average compared with the year-ago quarter. Also, average sales price was 3% lower than the prior-year level, mainly due to a shift toward more entry-level homes.
Total orders decreased 8% from the year-ago period to 1,653 homes. The value of net orders fell 15% year over year to $644.2 million.
Financial Services segment revenues increased 8.6% from the prior-year level to $4.4 million.
Margins
Home sales gross margin increased to 19%, up 80 basis points (bps) from the prior-year figure of 18.2%. Notably, the said figure is the highest since 2015. Higher efficiencies in operations and cost-control measures resulted in higher margins during the quarter.
Selling, general and administrative expenses, as a percentage of home closing revenues, were up 20 bps to 10.6% due to additional marketing costs and sales commissions during the quarter.
Pre-tax earnings came in at $91.8 million, reflecting an increase of 9% from the year-ago period.
Balance Sheet
As of Dec 31, 2018, cash and cash equivalents totaled $311.5 million compared with $170.7 million on Dec 31, 2017. The upside was backed by a reduction of $209 million in total land and development spending in 2018. The reduction was mainly due to lower average cost of new entry-level lots and reduced spending.
Meanwhile, the company repurchased and retired approximately $2.58 million of its common stock under the share repurchase authorization of $100 million.
Debt-to-capital ratio of the company reduced to 43.2% as of Dec 31, 2018 from 44.9% on Dec 31, 2017. Also, net debt-to-capital ratio decreased to 36.7% from 41.4% in the said time frames.
2018 Highlights
Meritage Homes’ full-year 2018 adjusted earnings of $5.58 per share surpassed the consensus estimate of $5.22 by 6.9%. Also, the said figure increased 64% on a year-over-year basis.
Total home closing revenues amounted to $3.47 billion, reflecting a 9% year-over-year increase. Home deliveries during the year grew 11% from the year-ago level to 8,531 homes. However, home order value decreased 2% from a year ago. Home closing gross margin improved 60 bps to 18.2% in 2018.
Total orders grew 2% from the prior-year level to 8,089 in the full year of 2018, however, value of net orders fell 2% to $3,240 million. Meanwhile, pre-tax earnings improved 14% from a year ago to $283.3 million.
Zacks Rank & Key Picks
Currently, Meritage Homes carries a Zacks Rank #3 (Hold). Some better-ranked stocks in the Zacks Construction sector include Gates Industrial Corporation PLC (GTES - Free Report) , Lennox International Inc. (LII - Free Report) , and Great Lakes Dredge & Dock Corporation (GLDD - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Gates Industrial, Lennox and Great Lakes’ earnings for the current year are expected to increase 44.6%, 18.9% and 111%, respectively.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.
See the pot trades we're targeting>>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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