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Meritage Homes' earnings outlook fell again after its Q1 release, landing it a Zacks Rank #5 (Strong Sell).
The U.S. homebuilder's recent downward revisions are part of industry-wide setbacks.
Meritage Homes Corporation (MTH - Free Report) is a U.S. homebuilding giant that’s suffering alongside the slowing housing market, dragged down by high mortgage rates, inflation, and more.
MTH’s downward earnings per share (EPS) revisions since its first quarter release on April 22 earn the homebuilder a Zacks Rank #5 (Strong Sell).
Time for Investors to Stay Away from MTH Stock?
Meritage Homes is the fifth-largest public homebuilder in the U.S., based on homes closed in 2025. The company specializes in building energy-efficient, affordable entry-level and first move-up homes.
Meritage Homes operates in 12 states mostly across the Sun Belt and Southeast: Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina.
The homebuilder went on a massive run from 2011 until 2022, as did most of the industry. MTH and its peers road the post-financial crisis economic and Wall Street boom that was capped off by 20% average sales growth between 2020 and 2022.
Image Source: Zacks Investment Research
The wild Covid-driven housing boom created a massive pull forward across the home-buying market. The market benefited from a buyer-friendly low-interest and mortgage rate environment. The housing market has cooled significantly since then as home prices soar and mortgage rates remain elevated. The average 30-year fixed rate mortgage hovers at around 6.37% righ now vs. between 2.65% and 4% from early 2020 to early 2022.
MTH said its first quarter was dented by a severe winter storm in January, geopolitical tensions in Iran, higher mortgage rates, and softer consumer sentiment. Meritage has been forced to utilize more incentives to move homes, which hurts margins.
Meritage Homes is projected to see its revenue fall 6% YoY, following an 8% decline last year. Meanwhile, its adjusted earnings are expected to sink another 29% YoY in 2026, after tanking in 2025.
Its FY26 Zacks consensus EPS estimate has fallen 14% since its late April release, with its 2027 estimate 12% lower. These recent downward revisions earn the stock a Zacks Rank #5 (Strong Sell), and extend a larger downturn over the past year.
Image Source: Zacks Investment Research
MTH shares have climbed 400% in the past 15 years to lag the S&P 500’s 500% and its industry’s 430%. The stock is down 9% over the last 12 months while the benchmark has climbed 30%. The ongoing macroeconomic headwinds, from inflation and higher mortgage rates, are likely to keep weighing on Meritage Homes in the short term.
Investors might want to stay away from Meritage Homes for now since the housing market remains under stress and the broader stock market has surged to fresh highs. Plus, it Building Products-Home Builders segment is in the bottom 7% of 250 Zacks industries. That said, the homebuilder’s long-term outlook likely remains intact given the need for more housing inventory in the U.S.
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Bear of the Day: Meritage Homes Corporation (MTH)
Key Takeaways
Meritage Homes Corporation (MTH - Free Report) is a U.S. homebuilding giant that’s suffering alongside the slowing housing market, dragged down by high mortgage rates, inflation, and more.
MTH’s downward earnings per share (EPS) revisions since its first quarter release on April 22 earn the homebuilder a Zacks Rank #5 (Strong Sell).
Time for Investors to Stay Away from MTH Stock?
Meritage Homes is the fifth-largest public homebuilder in the U.S., based on homes closed in 2025. The company specializes in building energy-efficient, affordable entry-level and first move-up homes.
Meritage Homes operates in 12 states mostly across the Sun Belt and Southeast: Arizona, California, Colorado, Utah, Tennessee, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, and South Carolina.
The homebuilder went on a massive run from 2011 until 2022, as did most of the industry. MTH and its peers road the post-financial crisis economic and Wall Street boom that was capped off by 20% average sales growth between 2020 and 2022.
Image Source: Zacks Investment Research
The wild Covid-driven housing boom created a massive pull forward across the home-buying market. The market benefited from a buyer-friendly low-interest and mortgage rate environment. The housing market has cooled significantly since then as home prices soar and mortgage rates remain elevated. The average 30-year fixed rate mortgage hovers at around 6.37% righ now vs. between 2.65% and 4% from early 2020 to early 2022.
MTH said its first quarter was dented by a severe winter storm in January, geopolitical tensions in Iran, higher mortgage rates, and softer consumer sentiment. Meritage has been forced to utilize more incentives to move homes, which hurts margins.
Meritage Homes is projected to see its revenue fall 6% YoY, following an 8% decline last year. Meanwhile, its adjusted earnings are expected to sink another 29% YoY in 2026, after tanking in 2025.
Its FY26 Zacks consensus EPS estimate has fallen 14% since its late April release, with its 2027 estimate 12% lower. These recent downward revisions earn the stock a Zacks Rank #5 (Strong Sell), and extend a larger downturn over the past year.
Image Source: Zacks Investment Research
MTH shares have climbed 400% in the past 15 years to lag the S&P 500’s 500% and its industry’s 430%. The stock is down 9% over the last 12 months while the benchmark has climbed 30%. The ongoing macroeconomic headwinds, from inflation and higher mortgage rates, are likely to keep weighing on Meritage Homes in the short term.
Investors might want to stay away from Meritage Homes for now since the housing market remains under stress and the broader stock market has surged to fresh highs. Plus, it Building Products-Home Builders segment is in the bottom 7% of 250 Zacks industries. That said, the homebuilder’s long-term outlook likely remains intact given the need for more housing inventory in the U.S.