Meritage Homes Corporation
) reached a 52-week high of $50.63 on Thursday, May 2, 2013
gaining momentum from solid first quarter results on Apr 24. The
closing price of the shares on May 2 was $50.12.
Share Price Drivers
Meritage Homes reported strong first-quarter 2013 results on
the back of double-digit increases in home sales, orders, and
Meritage Homes' first-quarter 2013 earnings per share of 32
cents beat the Zacks Consensus Estimate of 25 cents by 28.0%.
Earnings per share also improved significantly from a loss of 15
cents a share recorded in the prior-year quarter buoyed by robust
Total homebuilding revenue in the first quarter of 2013
amounted to $336.4 million, up 64.6% year over year. Reported
revenues beat the Zacks Consensus Estimate of $316 million by
6.5%. Meritage's home closing revenues were $330.7 million, up
62.1% from the prior-year quarter. Year-over-year growth in home
closing revenues was attributable to a 39% increase in the number
of homes closed and a 17% hike in average closing prices.
The company benefited from stabilizing recovery in the housing
market. This was backed by low interest rates and high
affordability as renting became a more expensive option luring
buyers to new homes. In fact, markets in California, Colorado,
the Carolinas and Florida witnessed strongest order growth during
Assuming that housing demand will continue to increase
attributable to the improvement in overall economy and job
market and low mortgage rates, the company expects 40% to 45%
year-over-year increase in revenues for each of the remaining
three quarters of 2013.
Earnings per share are expected in the range of $2.20 to $2.45
for 2013, which marks a 350% - 400% increase in pre-tax earnings.
The company expects to end 2013 with 185 active communities. The
company further intends to invest up to $600 million in land
development in 2013.
The robust quarterly results and a promising outlook for the
upcoming quarters led to an upward movement in estimates. In
fact, the Zacks Consensus Estimate for 2013 and 2014 increased a
respective 1.3% and 3.1% to $2.31 and $3.67 over the last 7
Meritage Homes carries a Zacks Rank #1 (Strong Buy).
Other stocks in the homebuilding sector that are performing as
well as Meritage and therefore deserve a mention include
D. R. Horton Inc.
Ryland Group Inc.
MDC Holdings Inc.
). All the three companies carry a Zacks Rank #1 (Strong
D R HORTON INC (DHI): Free Stock Analysis
MDC HLDGS (MDC): Free Stock Analysis Report
MERITAGE HOMES (MTH): Free Stock Analysis
RYLAND GRP INC (RYL): Free Stock Analysis
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