Earnings Preview for Meritage Homes

On Wednesday, January 27, Meritage Homes MTH will release its latest earnings report. Here is Benzinga's outlook for the company.

What Are Earnings, Net Income, And Earnings Per Share?

Earnings and EPS are useful metrics of profitability. Total earnings also known as net income is equal to total revenue minus total expenses. Dividing net income by the total number of shares outstanding yields EPS.

Earnings And Revenue

Sell-side analysts expect Meritage Homes's EPS to be near $3.36 on sales of $1.31 billion. Meritage Homes earnings in the same period a year ago was $2.65 per share. Quarterly sales came in at $1.14 billion.

Why Analyst Estimates And Earnings Surprises Are Important

Analysts who cover this company will publish forward-looking estimates of its revenue and EPS each quarter. Averaging together every EPS and revenue prediction that each analyst makes about a company in a quarter yields the "consensus estimates." A company posting earnings or revenue above or below the consensus estimate is known as an "earnings surprise" and may move the stock by a considerable margin.

If the company were to post earnings in line with the consensus estimate when it reports Wednesday, EPS would be up 26.79%. Revenue would be up 15.22% from the year-ago period. The company's reported EPS has stacked up against analyst estimates in the past like this:

Stock Performance

Shares of Meritage Homes were trading at $96.11 as of January 25. Over the last 52-week period, shares are up 39.85%. Given that these returns are generally positive, long-term shareholders are probably happy going into this earnings release.

Do not be surprised to see the stock move on comments made during its conference call. Meritage Homes is scheduled to hold the call at 09:30:00 ET and can be accessed here.