Meritage Homes Corporation MTH is slated to report fourth-quarter 2024 results on Jan. 29, after market close.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
In the last reported quarter, the company’s earnings and total closing revenues topped the Zacks Consensus Estimate but declined year over year. Total closing revenues decreased 2% from the prior-year quarter’s level.
Meritage Homes’ earnings beat the consensus mark in the trailing 17 quarters.
Meritage Homes Corporation Price and EPS Surprise
Meritage Homes Corporation price-eps-surprise | Meritage Homes Corporation Quote
How Are Estimates Placed for MTH?
The Zacks Consensus Estimate for fourth-quarter 2024 earnings per share (EPS) decreased to $2.25 from $2.27 in the past 30 days. The said figure indicates a 16.4% decrease from the year-ago level of $2.69 per share.
The consensus mark for revenues is pegged at $1.57 billion, indicating a 5.1% year-over-year decrease.
Factors at Play for Meritage Homes’ Quarterly Results
Meritage Homes’ fourth-quarter earnings and revenues are expected to have decreased year over year due to affordability pressures and the ongoing use of incentives. Despite ongoing affordability concerns, Meritage Homes’ ability to offer financing incentives, including rate buydowns, helps mitigate the impact of higher borrowing costs. The company's focus on the entry-level market, which remains structurally undersupplied, should continue to provide a steady stream of buyers.
Also, a key development in the fourth quarter will be Meritage Homes’ integration of Elliott Homes, a private builder with a strong presence in the Gulf Coast markets of Mississippi, Alabama, and the Florida Panhandle.
The company expects home closing to be in the range of 3,750-3,950 units in the to-be-reported quarter, down from 3,951 units reported a year ago. Also, home closing revenues are anticipated to be in the $1.5-$1.59 billion range, down from $1.64 billion in the year-ago period.
We expect home closing units to decrease 1.7% year over year to 3,882 units. We expect home closing revenues to drop 4.8% year over year to $1.5564 billion due to lower average selling price (ASP) and homes closed. We expect the home closing ASP to be $402,580, down 3.1% year over year. We also expect land closing revenues to plunge 79.5% year over year to $2.4 million.
Segment-wise, for fourth-quarter 2024, our model predicts overall Homebuilding (which contributed 99.6% to total revenues in 2023) to have dropped 5.3% year over year to $1.57 billion. However, we expect financial services revenues (which contributed 0.4% to total revenues in 2023) to increase 8.8% year over year to $7.8 million.
Margins
One of the biggest challenges for Meritage Homes in the fourth quarter will be balancing home affordability with profitability. While the company has maintained solid gross margins, it has had to increase its use of financing incentives to sustain demand. In the third quarter, incentives ran higher than expected, with discounts and rate buydowns weighing on the company’s ASP. This trend is expected to have continued in the fourth quarter, with management forecasting gross margins in the range of 22.5% to 23.5%, down from the third quarter’s 24.8% and the prior year’s figure of 25.2%.
Backlogs and Home Orders
During the fourth quarter of 2024, we expect home orders to grow 24% to 3,587 units. We expect the total backlog to decline 22% to 1,988 units and the total backlog value to decrease 25% year over year to $816.2 million.
What the Zacks Model Unveils for MTH
Our proven model does not predict 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 -1.27%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
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.
Weyerhaeuser WY has an Earnings ESP of +1.01% and a Zacks Rank of 1.
WY reported better-than-expected earnings in three of the last four quarters and missed on one occasion, the average surprise being 41.6%. The company’s earnings for the fourth quarter of 2024 are expected to decrease 56.3%.
Sterling Infrastructure, Inc. STRL currently has an Earnings ESP of +2.99% and a Zacks Rank of 3.
STRL’s earnings for the fourth quarter of 2024 are expected to increase 3.1%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 21.5%.
PulteGroup, Inc. PHM currently has an Earnings ESP of +2.36% and a Zacks Rank of 3.
PHM’s earnings for the fourth quarter of 2024 are expected to decrease 2.1%. The company reported better-than-expected earnings in each of the last four quarters, the average surprise being 10.9%.
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
