One of the leading homebuilding companies in the U.S.,
Meritage Homes Corporation
) recently released preliminary data reporting home orders for the
months of July and August, 2012.
MERITAGE HOMES (MTH): Free Stock Analysis
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The company received orders for 374 homes in the month of July
2012, up 17% year over year. In August 2012, the number of home
orders increased to 410 homes, marking a 52% year-over-year
increase. The total number of homes ordered in the months of July
and August stand at 784, up 33% year over year.
Meritage Homes expects to deliver about 4,043 homes in fiscal 2012,
thus leading to strong revenue and earnings growth. The company
intends to expand its operations to the Southeastern region of the
U.S. The cities in this region have immense potential for economic
growth, so there should be steady demand for homes going forward.
The company is also investing in well-positioned and high-priced
land and new communities in the most desirable submarkets, in order
to ensure profits as the market gets stronger.
Meritage closed 1,042 homes in the second quarter of 2012 versus
856 closings in the prior-year quarter. The sales growth was
highest in California and Florida, followed by Colorado and
Net sales orders climbed 49% year over year to 1,353 units during
the quarter, reflecting sales order gains across all states except
Nevada. This was the strongest sales order growth for Meritage
since the second quarter of 2008. With demand for homes getting
stronger, the company has started raising prices in most of the
communities. The value of net orders rose 63% to $385.8 million
owing to order growth and a 10% hike in average prices. Meritage
had 151 total active communities at the end of June, 2012 compared
with 145 active communities at the end of June, 2011.
We currently have a Neutral recommendation on Meritage Homes
Corporation. The stock carries a Zacks #2 Rank (a short-term 'Buy'
rating). We appreciate the company's ability to capitalize on the
gradual recovery in the housing market by recording top-line growth
and raising prices modestly. However, Meritage Homes still faces
tough competition from the resale markets.