On Jul 10, Zacks Investment Research upgraded
Meritage Homes Corporation
), one of the largest home building companies in the United
States, to a Zacks Rank #1 (Strong Buy), ahead of its second
quarter results on Jul 24.
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Why the Upgrade?
Meritage is expected to report solid top-line growth in the
upcoming quarter. The company expects to benefit from the steady
and broad-based housing market recovery, which continues to boost
both demand and prices despite recent concerns over rising
interest rates. In fact, Meritage has been witnessing
double-digit surprise for the past four quarters with an
impressive average beat of 68.08%.
Meritage beat the Zacks Consensus Estimate on both counts in the
first quarter of 2013. The company witnessed double-digit
year-over-year growth in home closing revenues, prices and net
orders in the quarter.
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 stunning 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.
Other Stocks to Consider
Other stocks in the homebuilding sector that are performing well
and deserve a mention include
D. R. Horton Inc.
Ryland Group Inc.
Taylor Morrison Home Corporation
), all carrying a Zacks Rank #1 (Strong Buy).