We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 17.3%. Homebuilding revenues beat the consensus mark by 4.1%. Earnings declined 16%, but total revenues (including Homebuilding and Financial Services revenues) grew 2.5% on a year-over-year basis. Total closing revenues also increased 2% from the prior-year quarter’s level.
Meritage Homes’ earnings beat the consensus mark in 21 of the trailing 22 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter 2023 earnings per share has moved down to $5.18 from $5.23 over the past 30 days. The said figure indicates a 26.9% decrease from the year-ago level of $7.09 per share.
The consensus mark for revenues is pegged at $1.52 billion, indicating a 23.5% year-over-year decline.
Factors to Note
Meritage Homes’ fourth-quarter Homebuilding revenues (accounted for 99.6% of total revenues in 2022) are expected to have declined year over year due to challenging affordability conditions owing to higher rates and continued economic uncertainties.
The U.S. housing market has been navigating through a challenging time, comprising higher mortgage rates. MTH expects housing demand to remain steady in the fourth quarter.
Although total home closing revenues are expected to have been lower year over year, MTH is expected to have generated sequentially higher revenues on the back of solid demand for entry-level and first move-up homes, given the lack of existing homes for sale in the market.
Financial Services revenues (accounted for 0.4% of total revenues in 2022) are anticipated to have declined from the prior-year quarter’s level.
Segment-wise, for fourth-quarter 2023, our model predicts Homebuilding and Financial services revenues to have declined 24.2% and 8.4% to $1.51 billion and $6.7 million, respectively, year over year.
The company expects home closing to be in the range of 3,500-3,700 units in the to-be-reported quarter, down from 4,540 units reported a year ago. Also, home closing revenues are anticipated to be in the $1.45-$1.53 billion range, down from $1.98 billion in the year-ago period.
We expect home closing units to decrease 20.5% year over year to 3,608 units and revenues to decline 24.1% to $1.51 billion. We expect the home closing average selling price (ASP) to be $417,140, down 4.5% year over year.
Geographically, we expect home closing ASP in West, Central and East regions to decline 12%, 1.2% and 2.7% to $479,010, $394,510 and $385,970, respectively, year over year.
We also expect land closing revenues to fall 29.1% year over year to $5.2 million.
Margins
For the fourth quarter, earnings of MTH are likely to have been affected by high costs associated with labor, which are likely to have negatively impacted the company’s operations and hurt margins in the to-be-reported quarter.
However, increased focus on solid spec strategy and performance-driving initiatives will partly help the company to offset the headwinds.
Owing to the headwinds above, the company expects diluted earnings per share to be within $4.84-$5.43. It expects the home closing gross margin to be around 25-26%, indicating a decline from the prior year’s value of 25.2% considering the midpoint. We expect home closing gross margin to improve 400 basis points to 25.6%, year over year.
Backlogs and Home Orders
Owing to the aforementioned economic uncertainties, for fourth-quarter 2023, we expect the total backlog to increase 5.6% to 3,518 units but the total backlog value to fall 1.6% year over year to $1.5 billion.
Geographically, we expect home orders in the West, Central and East regions to increase 129.2% to 1,059 units, 112.3% to 1,304 units and 57.8% to 1,155 units, respectively, year over year.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for MTH 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.
Earnings ESP: MTH has an Earnings ESP of +2.85%. 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 #3.
Other Stocks With the Favorable Combination
Here are some other companies in the Zacks Construction sector that, per our model, also have the right combination of elements to beat on earnings in the quarter to be reported.
LPX’s earnings for the to-be-reported quarter are expected to decline 14.8% year over year. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 98.3%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +1.85% and a Zacks Rank #3 at present.
VMC’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, delivering an average surprise of 13.6%. Earnings for the to-be-reported quarter are expected to grow 25.9% year over year.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +7.37 and a Zacks Rank #2 at present.
FND’s earnings for the to-be-reported quarter are expected to decline 57.8% year over year. The company's earnings beat the consensus mark in two of the trailing four quarters, met in one and missed in the other, delivering an average surprise of 4.9%.
Image: Shutterstock
What to Expect From Meritage Homes' (MTH) Q4 Earnings?
Meritage Homes Corporation (MTH - Free Report) is slated to report fourth-quarter 2023 results on Jan 31, after market close.
In the last reported quarter, the company’s earnings topped the Zacks Consensus Estimate by 17.3%. Homebuilding revenues beat the consensus mark by 4.1%. Earnings declined 16%, but total revenues (including Homebuilding and Financial Services revenues) grew 2.5% on a year-over-year basis. Total closing revenues also increased 2% from the prior-year quarter’s level.
Meritage Homes’ earnings beat the consensus mark in 21 of the trailing 22 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for fourth-quarter 2023 earnings per share has moved down to $5.18 from $5.23 over the past 30 days. The said figure indicates a 26.9% decrease from the year-ago level of $7.09 per share.
Meritage Homes Corporation Price and EPS Surprise
Meritage Homes Corporation price-eps-surprise | Meritage Homes Corporation Quote
The consensus mark for revenues is pegged at $1.52 billion, indicating a 23.5% year-over-year decline.
Factors to Note
Meritage Homes’ fourth-quarter Homebuilding revenues (accounted for 99.6% of total revenues in 2022) are expected to have declined year over year due to challenging affordability conditions owing to higher rates and continued economic uncertainties.
The U.S. housing market has been navigating through a challenging time, comprising higher mortgage rates. MTH expects housing demand to remain steady in the fourth quarter.
Although total home closing revenues are expected to have been lower year over year, MTH is expected to have generated sequentially higher revenues on the back of solid demand for entry-level and first move-up homes, given the lack of existing homes for sale in the market.
Financial Services revenues (accounted for 0.4% of total revenues in 2022) are anticipated to have declined from the prior-year quarter’s level.
Segment-wise, for fourth-quarter 2023, our model predicts Homebuilding and Financial services revenues to have declined 24.2% and 8.4% to $1.51 billion and $6.7 million, respectively, year over year.
The company expects home closing to be in the range of 3,500-3,700 units in the to-be-reported quarter, down from 4,540 units reported a year ago. Also, home closing revenues are anticipated to be in the $1.45-$1.53 billion range, down from $1.98 billion in the year-ago period.
We expect home closing units to decrease 20.5% year over year to 3,608 units and revenues to decline 24.1% to $1.51 billion. We expect the home closing average selling price (ASP) to be $417,140, down 4.5% year over year.
Geographically, we expect home closing ASP in West, Central and East regions to decline 12%, 1.2% and 2.7% to $479,010, $394,510 and $385,970, respectively, year over year.
We also expect land closing revenues to fall 29.1% year over year to $5.2 million.
Margins
For the fourth quarter, earnings of MTH are likely to have been affected by high costs associated with labor, which are likely to have negatively impacted the company’s operations and hurt margins in the to-be-reported quarter.
However, increased focus on solid spec strategy and performance-driving initiatives will partly help the company to offset the headwinds.
Owing to the headwinds above, the company expects diluted earnings per share to be within $4.84-$5.43. It expects the home closing gross margin to be around 25-26%, indicating a decline from the prior year’s value of 25.2% considering the midpoint. We expect home closing gross margin to improve 400 basis points to 25.6%, year over year.
Backlogs and Home Orders
Owing to the aforementioned economic uncertainties, for fourth-quarter 2023, we expect the total backlog to increase 5.6% to 3,518 units but the total backlog value to fall 1.6% year over year to $1.5 billion.
Geographically, we expect home orders in the West, Central and East regions to increase 129.2% to 1,059 units, 112.3% to 1,304 units and 57.8% to 1,155 units, respectively, year over year.
What the Zacks Model Unveils
Our proven model predicts an earnings beat for MTH 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.
Earnings ESP: MTH has an Earnings ESP of +2.85%. 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 #3.
Other Stocks With the Favorable Combination
Here are some other companies in the Zacks Construction sector that, per our model, also have the right combination of elements to beat on earnings in the quarter to be reported.
Louisiana-Pacific Corporation (LPX - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #3 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
LPX’s earnings for the to-be-reported quarter are expected to decline 14.8% year over year. The company reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 98.3%.
Vulcan Materials Company (VMC - Free Report) has an Earnings ESP of +1.85% and a Zacks Rank #3 at present.
VMC’s earnings topped the consensus mark in three of the last four quarters and missed on one occasion, delivering an average surprise of 13.6%. Earnings for the to-be-reported quarter are expected to grow 25.9% year over year.
Floor & Decor Holdings, Inc. (FND - Free Report) has an Earnings ESP of +7.37 and a Zacks Rank #2 at present.
FND’s earnings for the to-be-reported quarter are expected to decline 57.8% year over year. The company's earnings beat the consensus mark in two of the trailing four quarters, met in one and missed in the other, delivering an average surprise of 4.9%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.