Meritage Homes (MTH Quick QuoteMTH - Free Report) is a $3.5 billion home builder whose shares have risen strongly off of the bear market lows.

But the turn in optimism for home builders is shared among companies like KB Home (KBH Quick QuoteKBH - Free Report) and Lennar (LEN Quick QuoteLEN - Free Report) who are also in the cellar of the Zacks Rank at this time.

Meritage offers a variety of homes that are designed with a focus on entry-level and first move-up buyers. Operations span Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, Tennessee and Utah.

Based in Scottsdale, AZ, Meritage Homes Corporation is one of the leading designers and builders of single-family homes. The company primarily engages in building and selling single-family homes for entry-level, first-time, move-up, luxury and active adult buyers in historically high-growth regions of the United States.

Earnings Outlook Turns South

While 2022 revenues saw a climb to nearly 22%, the sad irony for 2023 is that analyst projections for the topline in 2023 are expected to fall almost 23%.

The numbers don't lie here as topline estimates drop from $6.2 billion for 2022 to $4.8B for 2023.

More importantly for the Zacks Rank metric, EPS estimates drop over 50% from $26 to $12 this year.

This could be merely a function of analyst caution about housing markets going forward into the new year.

But it may also revolve around the steep rise in inflation and interest rates -- that could also cause a recession -- that have pushed many new home buyers to the sidelines.

Be sure to follow my colleague Tracey Ryniec who tracks all the housing data every week. I just had a conversation with her on my Mind Over Money podcast where she shared a ton of great insight and resources.