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Meritage Homes Unveils Design Collections, Boosts Innovation

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Meritage Homes Corporation (MTH - Free Report) has introduced Design Collections - a transformative, industry-first approach to transform the new home interior design process for move-up buyers.

Traditionally, most buyers would experience a paradox of choice due to an over-abundance of options that often cause difficulty in decision making. To reduce homebuyers’ pain in building a new home, Meritage Homes commissioned the new Wakefield study that addresses key barriers centered on three main concerns: time needed to design the interior of their new home, making cohesive style choices and sticking to their budget.

Per the study, nearly 40% of buyers spent more than 20 hours in the design center throughout the course of the building process. Moreover, 37% of buyers were found unhappy with the final product and 26% of them noticed a mismatch in their design selections. Notably, 45% of buyers noted that they exceeded their budget in upgrades by more than $21,000 on average.

Markedly, Design Collections enable buyers to confidently and efficiently style their homes within budget through the Studio M Design Center. At the Studio M Design Centers, buyers can select from a variety of different styles, from traditional, to transitional, to modern while streamlining the entire process. Notably, the company has coupled the new offering with the transparent pricing model to ensure buyers understand costs clearly, while saving them time.

The design centers and collections are now available across communities in Arizona, California, Colorado, Florida, Georgia, North Carolina, Tennessee and Texas, and will be opened to other markets early this year.

Meritage Homes’ Strategic Initiatives to Drive Growth

Meritage Homes remains focused on growing demand for entry-level homes with its LiVE.NOW product. The company is making homes out of speculations that promise faster delivery at a lower cost. Notably, its strategic shift to a pure-play entry-level and first-move-up builder is expected to yield higher absorptions going forward.

Additionally, it has reduced the average selling price for homes in order to address the needs of millennials (more than 83-million market, according to the Census Bureau) and baby boomers. Notably, since millennials are now showing a tendency to set up homes, demand is likely to pick up, which will lead to higher volumes.

Shares of Meritage Homes have outperformed the industry in the past year. The solid performance can be attributable to an impressive earnings surprise trend, having surpassed analysts’ expectation in 15 of the trailing 16 quarters. A strong brand presence and strategies relating to entry-level and first-move-up communities are providing a boost to the stock’s performance.

Going forward, Meritage Homes’ performance is anticipated to get a boost, given solid homebuilding prospects and the above-mentioned initiatives. Backed by solid results in third-quarter 2019, healthy employment levels, growing household incomes and low interest rates, the company projects 8,900-9,100 home closings in 2019 and $3.5 billion home closing revenues.

Moreover, the consensus estimate for 2020 earnings indicates 19.2% year-over-year growth. Also, revenues are anticipated to rise 7.9% from the year-ago period.

Zacks Rank & Key Picks

Currently, Meritage Homes carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Some better-ranked stocks in the same industry are M/I Homes, Inc. (MHO - Free Report) , KB Home (KBH - Free Report) and M.D.C. Holdings, Inc. (MDC - Free Report) . While M/I Homes and KB Home sport a Zacks Rank #1, M.D.C. Holdings carries a Zacks Rank #2 (Buy).

M/I Homes and KB Home surpassed estimates in all the trailing four quarters, with the average being 16.2% and 14.9%, respectively.

M.D.C. Holdings has three-five year expected earnings per share growth rate of 9.6%.

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