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In the last-reported quarter, the company’s earnings and home closing revenues topped the Zacks Consensus Estimate by 16.5% and 2.5%, respectively. Earnings and total revenues (including Homebuilding and Financial Services revenues) improved 55% and 10.5% on a year-over-year basis. The company surpassed earnings estimates in the trailing 14 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for third-quarter 2022 earnings has decreased to $6.41 from $6.56 per share over the past 30 days. Nonetheless, the said figure indicates a 22.1% increase from the year-ago earnings of $5.25 per share. The consensus mark for revenues is $1.63 billion, suggesting a 29.6% year-over-year improvement.
The U.S. housing market has been navigating through a challenging time comprising rising mortgage rates, continued supply-chain issues, material cost inflation and higher wages. Higher mortgage rates and higher home prices have been prompting for moderation in housing demand.
Despite unprecedented supply-chain issues and increased inflation, Meritage Homes’ third-quarter revenues are expected to have increased from the year-ago level, buoyed by higher pricing and a solid backlog level. Also, Meritage Homes has been focused on the growing demand for entry-level homes with its LiVE.NOW product that addresses the need for lower-priced homes.
The Zacks Consensus Estimate for the company’s homes closed is pegged at 3,584 units, which indicates an increase from 3,112 a year ago and a sequential growth from 3,221 homes. The same for home closing revenues is pegged at $1,624 million, which indicates a 29.8% increase from the year-ago period and a 15.3% sequential rise.
Meritage Homes has been witnessing industry-wide supply chain challenges, municipal delays, and higher material and labor costs.
To combat these aforementioned woes, the company has been raising average prices for homes. This, in turn, is likely to have helped in maintaining margins. The Zacks Consensus Estimate for the average selling price for homes is pegged at $453,000, which indicates an increase from $437,000 reported in the last-reported quarter.
Other Projections
The Zacks Consensus Estimate for total closing revenues (Homebuilding) is $1,635 million, indicating growth from the year-ago figure of $1,260 million.
Unprecedented supply-chain challenges, labor shortages and rising rates scenario are likely to have created hurdles for builders, thereby impacting revenues and orders.
Backlog at the end of third-quarter 2022 is currently pegged at 6,762 homes, indicating a decrease from 7,241 units reported in second-quarter 2022. Potential value of the backlog is pegged at $3,238 million, indicating a decline from $3,439 million from the second-quarter end.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Meritage Homes for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: MTH has an Earnings ESP of -9.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Eagle Materials Inc. (EXP - Free Report) has an Earnings ESP of +1.40% and carries a Zacks Rank #3.
EXP’s earnings topped the consensus mark in three of the last four quarters but missed on the one occasion, with the average surprise being 3.9%.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +3.29% and a Zacks Rank #1.
BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 27.1%. Earnings for the to-be-reported quarter are expected to increase 92.6% year over year.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +1.60% and a Zacks Rank #3.
KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 11.5%. Earnings for the to-be-reported quarter are expected to decline 1.6% year over year.
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Meritage Homes (MTH) to Post Q3 Earnings: What's in the Offing?
Meritage Homes Corporation (MTH - Free Report) is slated to report third-quarter 2022 results on Oct 26, after market close.
In the last-reported quarter, the company’s earnings and home closing revenues topped the Zacks Consensus Estimate by 16.5% and 2.5%, respectively. Earnings and total revenues (including Homebuilding and Financial Services revenues) improved 55% and 10.5% on a year-over-year basis. The company surpassed earnings estimates in the trailing 14 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for third-quarter 2022 earnings has decreased to $6.41 from $6.56 per share over the past 30 days. Nonetheless, the said figure indicates a 22.1% increase from the year-ago earnings of $5.25 per share. The consensus mark for revenues is $1.63 billion, suggesting a 29.6% year-over-year improvement.
Meritage Homes Corporation Price and EPS Surprise
Meritage Homes Corporation price-eps-surprise | Meritage Homes Corporation Quote
Factors to Note
The U.S. housing market has been navigating through a challenging time comprising rising mortgage rates, continued supply-chain issues, material cost inflation and higher wages. Higher mortgage rates and higher home prices have been prompting for moderation in housing demand.
Despite unprecedented supply-chain issues and increased inflation, Meritage Homes’ third-quarter revenues are expected to have increased from the year-ago level, buoyed by higher pricing and a solid backlog level. Also, Meritage Homes has been focused on the growing demand for entry-level homes with its LiVE.NOW product that addresses the need for lower-priced homes.
The Zacks Consensus Estimate for the company’s homes closed is pegged at 3,584 units, which indicates an increase from 3,112 a year ago and a sequential growth from 3,221 homes. The same for home closing revenues is pegged at $1,624 million, which indicates a 29.8% increase from the year-ago period and a 15.3% sequential rise.
Meritage Homes has been witnessing industry-wide supply chain challenges, municipal delays, and higher material and labor costs.
To combat these aforementioned woes, the company has been raising average prices for homes. This, in turn, is likely to have helped in maintaining margins. The Zacks Consensus Estimate for the average selling price for homes is pegged at $453,000, which indicates an increase from $437,000 reported in the last-reported quarter.
Other Projections
The Zacks Consensus Estimate for total closing revenues (Homebuilding) is $1,635 million, indicating growth from the year-ago figure of $1,260 million.
Unprecedented supply-chain challenges, labor shortages and rising rates scenario are likely to have created hurdles for builders, thereby impacting revenues and orders.
Backlog at the end of third-quarter 2022 is currently pegged at 6,762 homes, indicating a decrease from 7,241 units reported in second-quarter 2022. Potential value of the backlog is pegged at $3,238 million, indicating a decline from $3,439 million from the second-quarter end.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for Meritage Homes for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: MTH has an Earnings ESP of -9.22%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #4 (Sell). You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat on their respective quarters to be reported.
Eagle Materials Inc. (EXP - Free Report) has an Earnings ESP of +1.40% and carries a Zacks Rank #3.
EXP’s earnings topped the consensus mark in three of the last four quarters but missed on the one occasion, with the average surprise being 3.9%.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +3.29% and a Zacks Rank #1.
BCC’s earnings topped the consensus mark in all the last four quarters, with the average being 27.1%. Earnings for the to-be-reported quarter are expected to increase 92.6% year over year.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +1.60% and a Zacks Rank #3.
KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 11.5%. Earnings for the to-be-reported quarter are expected to decline 1.6% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.