Meritage Homes Corporation MTH reported third-quarter 2019 results, with earnings and revenues surpassing the Zacks Consensus Estimate on strong homebuying activity.
Earnings of $1.79 per share topped the consensus mark of $1.49 by 19.9%. Also, the reported figure improved 35% year over year backed by home closing revenues, gross margins and greater overhead leverage.
Home closing revenues amounted to $939.2 million that surpassed the consensus mark of $914 million by 2.3% and rose 7% year over year. Meanwhile, total revenues (including Home closing, Land closing and Financial services revenues) totaled $945.2 million, up 6.4% from year-ago quarter’s levels.
Meritage Corporation Price, Consensus and EPS Surprise
Meritage Corporation price-consensus-eps-surprise-chart | Meritage Corporation Quote
Homebuilding/Total Closing Revenues: Revenues in the segment increased 6% from the prior-year quarter’s tally to $940.9 million. The upside can be attributed to a 12% increase in volume, partially offsets by 4% reduction in average sales price (ASP) due to shift in product mix.
Home closing revenues in the East and Central regions were up by 15% and 9% year over year, respectively, while West remained flat.
Homes closed during the quarter came in at 2,419, up 12% year over year. Home closing gross margin for the third quarter increased 170 basis points (bps) to 19.8% from year-ago quarter’s figure, contributing 17% year-over-year increase to total home closing gross profit.
Total orders increased 24% from the prior-year quarter’s levels to 2,258 homes. The value of net orders also increased 20% year over year to $858.4 million mainly due to higher absorption rate.
However, land closing revenues amounted to $1.7 million that declined from $6.8 million in the year-ago quarter.
Financial Services: The segment’s revenues increased 13% from the prior-year quarter’s level to $4.3 million.
Selling, general and administrative expenses (as a percentage of home closing revenues) of 10.7% fell 30 bps from the prior-year quarter’s level of 11%.
As of Sept 30, 2019, cash and cash equivalents totaled $454.8 million compared with $311.5 million on Dec 31, 2018.
As of Sept 30, debt-to-capital ratio of the company fell to 41.1% from 43.2% on Dec 31, 2018. Also, net debt-to-capital ratio contracted to 31.3% from 36.7% on Dec 31, 2018.
Raised 2019 Guidance
Meritage Homes now expects 2019 home closings in the range of 8,900-9,100 compared with 8,700-9,100 projected earlier. The company expects total home closing revenues of approximately 3.5 billion, maintaining the mid-point of its previously guided range of $3.4-$3.6 billion.
The company anticipates home closing gross margin in mid to high 18% and earnings in the range of $5.50-$5.70 per share compared with $5.20-5.50 expected earlier.
Zacks Rank & Peer Releases
Meritage Homes currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
KB Home KBH reported third-quarter fiscal 2019 results, with earnings beating analysts’ expectation and revenues missing the same. The quarterly results primarily benefited from continued progress of the Returns-Focused Growth plan. Although the company’s top and the bottom line declined on a year-over-year basis, it is optimistic about improvement in fiscal fourth-quarter results.
Lennar Corporation LEN reported better-than-expected third-quarter fiscal 2019 (ended Aug 31, 2019) results. The quarterly numbers mainly benefited from a solid resurgence in demand for new homes, which depicts healthy economy and declining borrowing costs.
PulteGroup, Inc PHM reported third-quarter 2019 results, with earnings and revenues beating respective Zacks Consensus Estimate. Higher demand owing to favorable housing dynamics backed by lower interest rates and improved affordability had a positive impact on PulteGroup’s performance in the quarter.
Wall Street’s Next Amazon
Zacks EVP Kevin Matras believes this familiar stock has only just begun its climb to become one of the greatest investments of all time. It’s a once-in-a-generation opportunity to invest in pure genius.
Click for details >>
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Lennar Corporation (LEN) : Free Stock Analysis Report
KB Home (KBH) : Free Stock Analysis Report
Meritage Corporation (MTH) : Free Stock Analysis Report
PulteGroup, Inc. (PHM) : Free Stock Analysis Report
To read this article on Zacks.com click here.