Meritage Homes Corporation
) recently announced that it intends to offer senior unsecured
notes worth $150 million to qualified institutional buyers.
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Meritage intends to use a portion of the net proceeds to
repurchase its outstanding senior subordinate notes worth $99.8
million due 2017. The rest of the net proceeds will be used for
general corporate expenses.
The company has been witnessing strong increase in revenues,
orders, prices and backlog for the past few quarters on the back
of an improving housing market. In fact, the stabilizing recovery
in the housing market was also backed by lower home prices and
moderating interest rates as renting became a more expensive
option luring buyers to new homes.
Meritage reported impressive fourth-quarter 2012 results beating
the Zacks Consensus Estimate for both revenues and earnings on
the back of robust rise in home closings, revenues, improved
leverage of overhead expenses and reduced interest expenses. The
company has also been raising prices in most of its communities
with market demand gaining momentum.
In order to capitalize on the increased demand for new homes, the
company invested about $480 million in land and development in
fiscal 2012. The recent transaction will help the company improve
its inventory levels in order to meet the increased demand for
Meritage Homes currently carries a Zacks Rank #3 (Hold).
Other stocks in the homebuilding sector that are performing well
and deserve a mention include
) carrying a Zacks Rank #1 (Strong Buy) and
D. R. Horton Inc.
) carrying a Zacks Rank #2 (Buy).