Meritage Homes (NYSE:MTH) Stock, Quote.Headers.trade-ideas

Meritage Homes

Meritage Homes Corp is engaged as a designer and builder of single-family attached and detached homes. It has operations in three regions: West, Central, and East, which are comprised of ten states: Arizona, California, Colorado, Texas, Florida, Georgia, North Carolina, South Carolina, Tennessee, and Utah. The company operates with two principal business segments; homebuilding and financial services. The homebuilding segments are engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services and the financial services segment offer title and escrow, mortgage, and insurance services. The company generates key revenue from the homebuilding segment.

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Lennar Corporation (NYSE: LEN) reported third-quarter fiscal 2024 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.

Lennar Q3 Earnings &amp; Revenues Beat, Stock Down on Tepid Q4 View

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Toll Brothers, Inc. (NYSE: TOL) is scheduled to report third-quarter fiscal 2024  (ended Jul 31, 2024) results on Aug 20, after the closing bell.

Toll Brothers&#39; to Post Q3 Earnings: What&#39;s in the Cards?

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Lennar Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/len#NYSE">LEN</a>) reported third-quarter fiscal 2024 results, wherein its earnings and revenues surpassed the Zacks Consensus Estimate.
On a year-over-year basis, revenues increased, given the company&#39;s emphasis on maintaining a steady production rate to drive sales momentum. Lennar strategically utilized pricing, incentives, marketing expenditure and dynamic pricing insights to ensure steady sales volume despite fluctuations in interest rates.
However, earnings fell by a cent from the year-ago period. LEN&#39;s stock plunged 2.4% in the after-hours trading session on Sept. 19. Investors&#39; sentiments might have been hurt by lower earnings and gross margin in the fiscal third quarter, as well as tepid fiscal fourth-quarter guidance.
<h2>Quarterly Numbers</h2>
LEN reported adjusted earnings per share (excluding mark-to-market gains on technology investments and one-time items in its Multifamily segment) of $3.90, which topped the Zacks Consensus Estimate of $3.62 by 7.7%. The metric, however, slipped 0.3% year over year from $3.91 per share.
<div class="chart_embed">
<h3>Lennar Corporation Price, Consensus and EPS Surprise</h3>
<img alt="Lennar Corporation Price, Consensus and EPS Surprise" src="https://staticx-tuner.zacks.com/images/charts/fa/1726841318.png" style="height:265px; width:589px" title="" />
Lennar Corporation price-consensus-eps-surprise-chart | Lennar Corporation Quote
Revenues of $9.42 billion topped the Zacks Consensus Estimate of $9.29 billion by 1.4% and rose 7.9% year over year from $8.73 billion.
</div>
<h2>Segment Details</h2>
Homebuilding: Revenues of the segment totaled $9.05 billion, up 8.7% from the prior-year quarter. Under the Homebuilding umbrella, home sales contributed $9.02 billion to total revenues, up 8.8% from a year ago.
Land sales accounted for $19.5 million, down from $20.4 million in the prior-year quarter. The Other homebuilding unit contributed $8.6 million to homebuilding revenues, down from $12.3 million a year ago.
Home deliveries for the reported quarter improved 16% from the year-ago level to 21,516 units. The reported figure was better than our projection of 20,598 units for the quarter. The average sales price&nbsp;of homes delivered was $422,000, down 5.8% from the year-ago figure due to pricing to market through an increased use of incentives and product mix. Our model had predicted ASP to be $432,910 for the fiscal third quarter.
New orders rose 5% from the year-ago quarter to 20,587 homes. However, the potential value of net orders fell 0.9% year over year to $8.56 billion.
Backlog at the fiscal third-quarter end declined 20.5% from the year-ago quarter to 16,944 homes. Potential housing revenues from backlog decreased 21.4% year over year to $7.75 billion.
The gross margin on home sales was 22.5% for the quarter, down 190 basis points (bps). Notably, the reported figure came below our projection of 23% for the quarter. The decline was mainly due to decreased revenues per square foot and increased land costs year over year.
SG&amp;A expenses &mdash; as a percentage of home sales &mdash; decreased 30 bps to 6.7% due to a decrease in broker commissions and benefits of LEN&#39;s technology efforts.
Financial Services: The segment&#39;s revenues increased year over year to $273.3 million from $266.2 million for the reported quarter. Operating earnings for the quarter increased to $144.4 million from $149 million a year ago.
Lennar Multi-Family: Revenues of $93.4 million in the segment were down from $137.4 million in the prior-year quarter. The segment registered operating earnings of $78.9 million for the quarter against a loss of $8.7 million a year ago.
Lennar Other: The segment&#39;s revenues totaled $3.6 million, significantly down from $7.4 million a year ago. Its operating earnings were $20.1 million for the quarter against a loss of $26.2 million a year ago.
<h2>Financials</h2>
At the fiscal third-quarter end, Lennar had homebuilding cash and cash equivalents of $4.04 billion, down from $6.27 billion at the end of fiscal 2023. LEN has no outstanding borrowings under the $2.2 billion revolving credit facility, thereby providing $6.2 billion of liquidity.
The total homebuilding debt was $2.26 billion as of the fiscal third-quarter end, down from $2.82 billion at the fiscal 2023-end. Homebuilding debt to capital at the fiscal third-quarter end was 7.6%, down from 9.6% at the fiscal 2023-end.
LEN repurchased 3.4 million shares for $519 million in the fiscal third quarter.
<h2>Guidance</h2>
For fourth-quarter fiscal 2024, the company expects deliveries within 22,500-23,000 homes, depicting a fall from 23,795 homes delivered in the year-ago period. The company expects the ASP of the delivered units to be nearly $425,000, down from an ASP of $441,000 reported a year ago.
The gross margin on home sales is expected to be flat year over year. SG&amp;A expenses, as a percentage of home sales, are likely to be in the range of 6.7-6.8% for the quarter. In the prior year, gross margin was 24.2%, and SG&amp;A was 6.6%.
New orders are likely to be within 19,000-19,300 units, up from 17,366 homes reported a year ago.
Financial Services operating earnings are expected to be around $140 million, down from $168 million a year ago.
<h2>LEN&#39;s Zacks Rank &amp; Stocks to Consider</h2>
Lennar currently carries a Zacks Rank #4 (Sell).
Some better-ranked stocks in the same space are M/I Homes, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mho#NYSE">MHO</a>), Meritage Homes Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mth#NYSE">MTH</a>)&nbsp;and PulteGroup, Inc.&nbsp;(NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>). Each stock presently carries a Zacks Rank #2 (Buy).
M/I Homes is a Columbus, OH-based homebuilder that engages in the construction and sale of single-family residential homes.
MHO&#39;s EPS estimates for 2024 have increased to $19.76 from $19.58 over the past 30 days. The company&#39;s earnings surpassed the Zacks Consensus Estimate in three of the trailing four quarters and missed on one occasion, the average being 4.8%. MHO&#39;s earnings are expected to rise 21.9% year over year in 2024.
Meritage Homes is a Scottsdale, AZ-based company that designs and builds single-family attached and detached homes.
MTH&#39;s EPS estimates for 2024 have increased to $21.09 from $20.33 over the past 60 days. The company&#39;s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 21.5%. MTH&#39;s earnings are expected to rise 5.8% year over year in 2024.
PulteGroup is an Atlanta, GA-based homebuilder engaged in homebuilding and financial services businesses.
PHM&#39;s EPS estimates for 2024 have increased to $13.36 from $12.85 over the past 60 days. The company&#39;s earnings surpassed the Zacks Consensus Estimate in all the trailing four quarters, the average being 10%. PHM&#39;s earnings are expected to rise 14% year over year in 2024.
<a href="https://www.zacks.com/stock/news/2339343/lennar-q3-earnings-revenues-beat-stock-down-on-tepid-q4-view?cid=CS-BENZ-FT-analyst_blog|earnings_article-2339343">To read this article on Zacks.com click here.</a>

Lennar Q3 Earnings & Revenues Beat, Stock Down on Tepid Q4 View

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Shares of housing-related stocks are trading higher after the Fed policy decision to cut rates by 50 basis points, which could help curb housing unaffordability and increase demand.

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Shares of household durable companies are trading higher following strong New Home Sales economic data for July. Also, the sector may be moving in sympathy with the market after Fed Chair Powell offered an optimistic U.S. economic outlook and indicated future rate cuts.

Shares of homebuilders are trading higher in sympathy with Toll Brothers, which reported better-than-expected Q3 financial results and issued guidance above estimates.

The housing market is in flux, with home prices at record highs amid a demand and supply imbalance. Elevated mortgage rates – seen as a function of <a href="https://www.benzinga.com/economics/macro-economic-events/24/08/40365730/july-inflation-rate-falls-more-than-expected-supports-hopes-for-large-fed-rate-cu">interest rates at a 22-year high</a> and inflation, which is eating away into disposable income – are constraining purchases. In the wake of all this, NextEra Energy, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NEE#NYSE">NEE</a>) CEO John Ketchum recently lauded Florida as a thriving market for housing as well as commercial and industrial construction.
The Florida Housing Market: The Sunshine State has the distinction of being the biggest housing market in the country. Despite California having the twice as many residents, Florida has nearly double the number of home listings, <a href="https://www.realtor.com/news/trends/florida-housing-market-condos-home-prices-coast-inland/">said</a> Realtor.com in a recent report. It is a bellwether state &#8220;consistently attracting people from around the globe due to its significant tax advantages, perfect weather, and booming economy,&#8221;  Jenny Lenz, the managing director of Dolly Lenz Real Estate, told the website.
The report characterized the housing market in the state as split, with condominium prices on the coasts falling due to high insurance costs and assessment fees, while single-family home cost remained steady inland.
Recent data from Redfin showed that the median sale price of a home in Florida rose 2.3% year-over-year to $419,200, lower than the nationwide median price of $426,900. Although marking a decline from the April 2024 peak, home prices are still near the record levels, the real-estate company said. That said, the number of homes sold fell 14.1%, while inventory rose 16%.
While all roads led to Florida following the pandemic due to the state&#8217;s pulling points, things are changing now, a U.S. News report <a href="https://realestate.usnews.com/real-estate/articles/is-floridas-housing-market-in-trouble">said</a>. The deterrents are the expensive homeowner&#8217;s insurance due to hurricane threat in the state, higher home prices and the increase in property taxes.
See Also: <a href="https://www.benzinga.com/money/best-real-estate-stocks-right-now">Best Real Estate Stocks Right Now</a>
Commercial Real Estate &#8211; Risks &amp; Opportunities: After a tough year in 2023, the commercial real estate market nationwide is expected to bounce back this year as the Fed is widely expected to cut rates this year.
A report from the National Association of Realtors <a href="http://www.nar.realtor/sites/default/files/documents/2024-03-commercial-real-estate-market-insights-03-26-2024.pdf">noted</a> a troubled office sector, with falling lending activity and rising office availability and delinquencies. The office vacancy rate nationwide rose to a new record of 13.8% in February, it said. Leasing activity, a proxy for demand and interest, has dropped about 50 percentage points below pre-pandemic levels. Among other commercial real estate segments, multi-family was recovering from lows, retail spaces continued to slowdown and the industrial segment is showing signs of a slowdown.
NAR&#8217;s report flagged a sharp increase in rent for industrial spaces in Florida cities such as Orlando, Jacksonville and Tampa, with the spike attributed to strong demand for warehouse properties. The increases are in the magnitude of 10% from last year, it said.
That said, there is a looming risk. The low financing costs buyers are availing now could soon become a thing of the past, <a href="https://www.godfreylegal.com/what-2024-will-bring-for-commercial-real-estate-in-florida/#:~:text=2024%20will%20not%20be%20all,soon%20come%20to%20an%20end.">said</a> Godfrey Legal. It reasoned that many loans on commercial properties will mature later this year and in the upcoming year, with about $1.5 trillion in commercial real estate debt maturing. The terms of fresh loans or refinancing will likely be tougher, 
Corporates Make Beeline To Florida: Companies, especially big techs, which typically are based out of either the Silicon Valley or New York, are looking toward Florida, with many already having made the move. Ken Griffin's Citadel and Citadel Securities have permanently moved their headquarters to Miami. Amazon founder Jeff Bezos has shifted base out of Seattle to Florida, citing the need to be near his space venture Blue Origin.
Defense contractor Lockheed Martin has relocated its Space division headquarters to Titusville, Florida. JPMorgan has doubled down its presence in the state. <a href="https://www.benzinga.com/markets/equities/24/06/39457393/what-going-on-with-jp-morgan-shares-today">The big bank said in June that its downtown Miami office will double in size</a> from 80,000 square feet to 160,000 square feet in part to accommodate 400 additional employees. &#8220;Miami and South Florida are home to an increasing number of our clients, customers, community partners and employees, and a strategic location for our operations in Latin America as well,&#8221; said Jonathan Bello, head of Chase for Business Miami.
Florida is the fourth biggest state in terms of GDP, according to Bureau of Economic Analysis. The state also boasts of the highest population growth and it attracts remote workers due to the low cost of living, especially in northeast Florida, <a href="https://www.forbes.com/councils/forbesbusinesscouncil/2022/06/22/three-reasons-why-my-company-is-moving-to-florida/">said </a>Forbes contributor Gilda D&#8217;Incerti.
Potential Beneficiaries: With industry players and watchers betting on Florida&#8217;s housing and commercial real estate markets, real estate and utility companies operating in the state stand to gain big. Commercial real estate services and investment&nbsp;company, CBRE Group, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CBRE#NYSE">CBRE</a>), Jones Lang LaSalle Incorporated (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JLL#NYSE">JLL</a>) and Cushman &amp; Wakefield plc (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CWK#NYSE">CWK</a>), homebuilder Lennar Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LEN#NYSE">LEN</a>) and M/I Homes, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MHO#NYSE">MHO</a>), LGI Homes, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/LGIH#NASDAQ">LGIH</a>) and Meritage Homes Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) have big presence in the state.
Among utility companies operating in Florida are NextEra and Duke Energy Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DUK#NYSE">DUK</a>).
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/real-estate/24/08/40431571/florida-and-texas-could-reap-huge-benefits-if-harris-wins-according-to-grant-cardone-they-protect-th">Florida And Texas Could Reap Huge Benefits If Harris Wins, According To Grant Cardone. &#8216;They Protect The Property Owner&#8217;</a></li>
</ul>

Toll Brothers, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/tol#NYSE">TOL</a>) is scheduled to report third-quarter fiscal 2024&nbsp; (ended Jul 31, 2024) results on Aug 20, after the closing bell.
In the last reported quarter, the company&#39;s earnings missed the Zacks Consensus Estimate by 18.2%, but revenues beat the mark by 12.6%. Earnings and revenues increased 18.6% and 13.2% from the prior-year period, respectively.
On an encouraging note, earnings topped analysts&#39; expectations in three of the trailing four quarters and missed on another occasion, the average surprise being 12.9%.
<h3>Trend in Estimate Revision</h3>
The Zacks Consensus Estimate for the fiscal third-quarter earnings per share increased to $3.28 from $3.25 over the past 60 days. The said figure indicates a 12.1% decline from the year-ago EPS of $3.73.
The consensus mark for revenues is pegged at $2.7 billion, indicating 0.3% year-over-year growth.
<div class="chart_embed">
<h3>Toll Brothers Inc. Price and EPS Surprise</h3>
<img alt="Toll Brothers Inc. Price and EPS Surprise" src="https://staticx-tuner.zacks.com/images/charts/6e/1723708230.png" style="height:294px; width:610px" title="" />
Toll Brothers Inc. price-eps-surprise | Toll Brothers Inc. Quote
</div>
<h3>Factors to Note</h3>
Toll Brothers&#39; fiscal third-quarter home sales are expected to have increased slightly from the year-ago reported level, given higher deliveries. Although higher mortgage rates will impact the volumes to some extent, low-existing homes for sale have been driving demand for new homes in the market. This tailwind is likely to have helped the company drive growth.
This apart, its focus on luxury move-up buyers, who already possess a residence and are looking to shift to larger and better homes, will somewhat contribute to the revenues. Toll Brothers has been enjoying greater pricing power than other homebuilding companies, as luxury homebuyers are less sensitive to price changes. The company has also been benefiting from the strategy of broadening its product lines, price points and geographies, along with spec sales.
On the fiscal second-quarter earnings call, TOL stated that it expects higher home deliveries within 2,750-2,850 units from 2,524 units delivered in the prior-year quarter (considering the midpoint) at an average price of $950,000-$960,000 (suggesting a decline from $1,059,100 a year ago).
Higher land, labor and raw material costs, along with high incentives, are expected to put pressure on the fiscal third-quarter margins. Toll Brothers expects the adjusted home sales gross margin to be 27.7%, implying a decrease from 29.3% reported in the year-ago period. SG&amp;A expenses are estimated to be 9.2% of home sales revenues, indicating a rise from 8.6% reported in the year-ago period. The company expects the effective tax rate to be 26%. 
Our Estimates 
Our model predicts home sales revenues to decline 0.7% year over year to $2.66 billion due to a lower ASP projection of $955,300 (down 9.9% year over year). We expect deliveries to grow 10.1% year over year to 2,779 units in the quarter.
We expect net signed contracts to be around 2,904 units, indicating an improvement of 29.3% from the prior-year reported figure.
Our model predicts a backlog of 7,217 units, indicating a decline of 1.1% from the year-ago period. The same for the backlog (in values) is pegged at $7.57 billion, implying a decline of 3.9% from the $7.87 million recorded at the third quarter of fiscal 2023-end.
<h3>What Our Quantitative Model Predicts</h3>
Our proven model does not conclusively predict an earnings beat for Toll Brothers this time around. This is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, this is not the case here, as you will see below.
Earnings ESP: Earnings ESP, which represents the difference between the Most Accurate Estimate and the Zacks Consensus Estimate, is 0.00%. You can uncover the best stocks to buy or sell before they&#39;re reported with our Earnings ESP Filter.
Zacks Rank: The company currently carries a Zacks Rank #3.
<h3>Peer Releases</h3>
Meritage Homes Corporation (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/mth#NYSE">MTH</a>) reported impressive second-quarter 2024 results, wherein the earnings and total closing revenues topped the Zacks Consensus Estimate and grew year over year.
MTH&#39;s quarterly results were backed by resilient housing demand and the company&#39;s progress in delivering quick-turning and affordable move-in-ready homes. Meritage Homes now expects 14,750-15,500 home closings for the year, up from the prior expected range of 14,500-15,000. The closings are now likely to generate revenues between $6.1 billion and $6.3 billion, up from the priorly expected range of $6-$6.2 billion.
NVR, Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/nvr#NYSE">NVR</a>) reported mixed second-quarter 2024 results, with earnings missing the Zacks Consensus Estimate while Homebuilding revenues surpassed the same. On the other hand, both metrics increased on a year-over-year basis.
The upside was backed by improved demand trends, which resulted in higher settlements. Although the cancelation rate increased during the second quarter, growth in new orders and increased ASP of new orders are encouraging for the company&#39;s prospects. Settlements in the quarter were up 11% year over year to 5,659 units. New orders increased 3% from the prior-year quarter&#39;s level to 6,067 units. On a unit basis, backlog at the end of Jun 30, 2024, improved 3% from the prior-year quarter&#39;s figure to 11,597 homes and 6% on a dollar basis to $5.45 billion.
PulteGroup Inc. (NYSE: <a class="ticker" href="https://www.benzinga.com/stock/phm#NYSE">PHM</a>) reported stellar results in the second quarter of 2024, wherein earnings and revenues handily beat the Zacks Consensus Estimate. On a year-over-year basis, both the bottom and top lines increased.
PHM saw significant benefits from key factors that drove its success. The company&#39;s balanced operating model resulted in increases in closings, average sales price and gross margin, which collectively led to a 19.3% increase in EPS. Effective management of sales price, pace and starts on a community-by-community basis enabled the company to achieve high returns on invested capital and equity, evidenced by a 27.1% return on equity over the past 12 months.
<a href="https://www.zacks.com/stock/news/2322401/toll-brothers-tol-to-post-q3-earnings-what-s-in-the-cards?cid=CS-BENZ-FT-analyst_blog|earnings_preview-2322401">To read this article on Zacks.com click here.</a>

Toll Brothers' to Post Q3 Earnings: What's in the Cards?

Wolfe Research analyst Truman Patterson upgrades Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) from Peer Perform to Outperform and announces $230 price target.

Upgrades

Price Target

Wolfe Research Upgrades Meritage Homes to Outperform, Announces $230 Price Target

Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) has outperformed the market over the past 15 years by 3.4% on an annualized basis producing an average annual return of 15.01%. Currently, Meritage Homes has a market capitalization of $6.65 billion. 
Buying $100 In MTH: If an investor had bought $100 of MTH stock 15 years ago, it would be worth $818.91 today based on a price of $183.05 for MTH at the time of writing.
<h3>Meritage Homes's Performance Over Last 15 Years</h3>
<img src="https://www.benzinga.com/files/images/story/2024/1723048240_0.png" alt="comp_fig" />
Finally -- what's the point of all this? The key insight to take from this article is to note how much of a difference compounded returns can make in your cash growth over a period of time.
This article was generated by Benzinga's automated content engine and reviewed by an editor.

If You Invested $100 In This Stock 15 Years Ago, You Would Have $800 Today

-&nbsp;U.S. leading hard siding company becomes exclusive siding and trim supplier&nbsp;for nation's fifth largest homebuilder -
CHICAGO, Aug. 6, 2024 /PRNewswire/ -- James Hardie Building Products Inc. (James Hardie), a subsidiary of James Hardie Industries plc (ASX: JHX;&nbsp;NYSE:&nbsp;JHX) and a North American leader in home-building products, today announced a multi-year exclusive agreement with Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>), the fifth-largest public homebuilder in the United States.
The exclusive agreement bolsters the existing relationship between James Hardie and Meritage and will make Hardie&#xAE; siding and trim products standard on every new Meritage home where hard siding is installed across the U.S. through 2027.

James Hardie Building Products Announces Exclusive Product Deal With Meritage Homes; Will Make Hardie Siding And Trim Products Standard On Every New Meritage Home Where Hard Siding Is Installed Across The U.S. Through 2027

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Shares of household durable companies are trading lower amid overall market weakness on US economic concerns.

Seaport Global analyst Kenneth Zener downgrades Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) from Neutral to Sell and announces $153 price target.

Downgrades

Seaport Global Downgrades Meritage Homes to Sell, Announces $153 Price Target

Raymond James analyst Buck Horne maintains Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) with a Outperform and raises the price target from $220 to $230.

Raymond James Maintains Outperform on Meritage Homes, Raises Price Target to $230

Keefe, Bruyette &amp; Woods analyst Jade Rahmani maintains Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) with a Market Perform and raises the price target from $195 to $210.

Keefe, Bruyette & Woods Maintains Market Perform on Meritage Homes, Raises Price Target to $210

Wedbush analyst Jay McCanless maintains Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) with a Underperform and raises the price target from $148 to $160.

Wedbush Maintains Underperform on Meritage Homes, Raises Price Target to $160

Goldman Sachs analyst Susan Maklari maintains Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) with a Neutral and raises the price target from $173 to $197.

Goldman Sachs Maintains Neutral on Meritage Homes, Raises Price Target to $197

Wedbush analyst Jay McCanless reiterates Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) with a Underperform and maintains $148 price target.

Reiteration

Wedbush Reiterates Underperform on Meritage Homes, Maintains $148 Price Target

Sentiment continues to be jittery, with the major index futures priming for a lower opening on Thursday as traders look ahead to the first read of second-quarter GDP data and more earnings. The tech space could once again drag the broader market after a few disappointing earnings reports from the likes of Franco-Italian chipmaker STMicroelectronics N.V. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/STM#NYSE">STM</a>), which predominantly supplies to the automotive end market, and semiconductor test-equipment company Teradyne, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TER#NASDAQ">TER</a>).
Traders may also stay glued to second-quarter GDP data to confirm the slowdown suggested by some recent data does not point to a hard landing. That said, bond yields are dipping as the market, factoring in not-so-positive economic data, and commodities are moving to the downside.
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</tbody>
</table>
</figure>
In premarket trading on Thursday, the SPDR S&amp;P 500 ETF Trust (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>) moved down 0.24% to $539.94, while the Invesco QQQ ETF (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/QQQ#NASDAQ">QQQ</a>) fell 0.43% to $461.40, according to <a href="https://benzinga.grsm.io/lxquj26b2sag" target="_blank" rel="noreferrer noopener">Benzinga Pro data</a>. Cues From Last Session:
Mega-cap earnings proved to be the undoing of the market on Wednesday, triggering an across-the-board sell-off. The major indices opened lower, with the sell-off intensifying in early trading after S&amp;P Global&#8217;s manufacturing purchasing managers&#8217; index unexpectedly fell into contraction territory and new home sales for June unexpectedly declined.
The key averages declined steadily through the session before closing the day notably lower. The S&amp;P 500 Index and the Nasdaq pulled back to their lowest closes since June 12 and June 11, respectively, while the 30-stock Dow Jones Industrial Average fell to a nearly two-week low. 
On a percentage basis, the S&amp;P 500 and the Nasdaq Composite indices posted their worst performances since Dec. 15, 2022 and Oct. 7, 2000, respectively, <a href="https://www.marketwatch.com/livecoverage/stock-market-today-dow-futures-retreat-as-big-tech-earnings-disappoint/card/nasdaq-s-p-500-end-with-worst-days-since-2022-after-sharp-selloff-in-stocks-51c9PsIEmZRNo2D3h3Jc?mod=bnbh">according</a> to MarketWatch. 
Defensive utility, healthcare and consumer staple stocks escaped the brunt of the selling pressure, which was manifested more acutely in IT, communication services and consumer discretionary stocks. Energy stocks also posted modest gains.
Small-caps also joined their large-cap counterparts in the sell-off, with the Russell 2,000 slipping over 2%.
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Index</td>
<td>Performance (+/-)</td>
<td>Value</td>
</tr>
<tr>
<td>Nasdaq Composite</td>
<td>-3.64%</td>
<td>17,342.41</td>
</tr>
<tr>
<td>S&amp;P 500 Index</td>
<td>-2.31%</td>
<td>5,427.13</td>
</tr>
<tr>
<td>Dow Industrials</td>
<td>-1.25%</td>
<td>39,853.87</td>
</tr>
<tr>
<td>Russell 2000</td>
<td>-2.14%</td>
<td>2,195.37</td>
</tr>
</tbody>
</table>
</figure>
Insights From Analysts:
Morgan Stanley Chief U.S. Equity Strategist Mike Wilson in a podcast on Monday said the perceived underperformers under a Donald Trump presidency are alternative energy stocks and stocks of companies likely to be affected the most by increased tariffs. He noted that it is a widely-held view that Trump&#8217;s win in conjunction with a Republican sweep could be particularly beneficial for banks, small-caps, energy infrastructure and even industrials.
These cyclical areas that are perceived to outperform under a Trump Presidency did work in 2016 and through part of 2017, but they did even better during Biden&#8217;s first year, Wilson said. &#8220;Our rationale on this front is that the cycle plays a larger role in how stocks trade broadly and at the sector level than who is in the White House,&#8221; he said.
These cyclicals show &#8220;strong, but often not quite as strong performance in mid-cycle periods like 2016-17. They tend to show less strong returns later in the cycle like the current period,&#8221; he said.
Wilson also delved into the lower-quality, small-cap rally, attributing it to the combination of softer consumer price inflation data and hopes for an earlier Fed cut combined with dealer demand and short covering from investors on the back of Trump's improving odds.
&#8220;For those looking to the 2016 playbook,  we would point out that relative earnings revisions for small-cap cyclicals are much weaker today than they were during that period,&#8221; he said.
&#8220;Based on the evidence to date, we  would resist the urge to chase this cohort and lean back into large-cap quality and defensives.&#8221;
Charlie Bilello, chief market strategist at Creative Planning Investor, shared a graphic that showed the spread between the small and large caps, suggesting the &#8220;largest 10-day Small Cap outperformance ever.&#8221;
<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"> 
<div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="500" data-dnt="true">US Small Caps are up 7% over the last 10 trading days while US Large Caps are down 4%. The 11% spread is the largest 10-day Small Cap outperformance ever. <a href="https://twitter.com/search?q=%24IWM&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$IWM</a> <a href="https://twitter.com/search?q=%24SPY&amp;src=ctag&amp;ref_src=twsrc%5Etfw">$SPY</a> Chart of the Day: <a href="https://t.co/JHO611M8Fh">https://t.co/JHO611M8Fh</a> <a href="https://t.co/0kQXFzjpkD">pic.twitter.com/0kQXFzjpkD</a>
&mdash; Charlie Bilello (@charliebilello) <a href="https://twitter.com/charliebilello/status/1816234621165518911?ref_src=twsrc%5Etfw">July 24, 2024</a></blockquote>
<script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script></div>
</figure>
Upcoming Economic Data:
<ul>
<li>The Bureau of Economic Analysis is due to release the first estimate of second-quarter GDP at 8:30 a.m. EDT. Economists, on average, expect annualized quarterly GDP growth of 2.1% compared to the 1.4% growth in the first quarter. Traders may also keep an eye on the inflation components of the report, namely the annual rate of personal consumption expenditure and the GDP deflator.</li>
<li>The Labor Department will release its weekly jobless claims report at 8:30 a.m. EDT. The number of individuals claiming unemployment benefits may have come in at 235,000 in the week ended July 20 compared to 243,000 in the previous week.</li>
<li>The Commerce Department is scheduled to release the durables goods orders report for June at 8:30 a.m. EDT. The consensus estimate calls for a 0.3% month-over-month increase in orders for durable goods, faster than the 0.1% growth in May. Excluding the volatile transportation orders, that may have increased 0.2%, reversing part of the 0.1% drop in May.</li>
<li>The Treasury will auction four- and eight-week bills at 11:30 a.m. EDT and seven-year notes at 1 p.m. EDT.</li>
</ul>
See Also: <a href="https://www.benzinga.com/money/how-to-trade-futures">How To Trade Futures</a>
Stocks In Focus:
<ul>
<li>Chipotle Mexican Grill, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CMG#NYSE">CMG</a>) rose over 3% <a href="https://www.benzinga.com/premarket">in premarket trading </a>following the quarterly results announcement from the fast-food chain.</li>
<li>The other stocks moving on earnings are Edwards Lifesciences Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EW#NYSE">EW</a>) (down over 22%), Ford Motor Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>) (down over 13.6%), International Business Machines Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBM#NYSE">IBM</a>) (up over 4%), Las Vegas Sands Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LVS#NYSE">LVS</a>) (down over 3%), ServiceNow, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NOW#NYSE">NOW</a>) ORLY) (up about 6.50%), Teradyne (down over 8%), STMicroelectronics (down over 12.50%) and O&#8217;Reilly Automotive, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ORLY#NASDAQ">ORLY</a>) (down over 5%).</li>
<li>AbbVie Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/ABBV#NYSE">ABBV</a>), American Airlines Group Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAL#NASDAQ">AAL</a>), AstraZeneca PLC (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AZN#NASDAQ">AZN</a>), Comcast Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CMCSA#NASDAQ">CMCSA</a>), Dow Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DOW#NYSE">DOW</a>), Hasbro, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HAS#NASDAQ">HAS</a>), Honeywell International Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/HON#NASDAQ">HON</a>), Sanofi (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SNY#NASDAQ">SNY</a>), Southwest Airlines Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LUV#NYSE">LUV</a>), STMicroelectronics N.V. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/STM#NYSE">STM</a>), Union Pacific Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/UNP#NYSE">UNP</a>) and Xerox Holdings Corporation (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/XRX#NASDAQ">XRX</a>) are among the<a href="https://www.benzinga.com/calendars/earnings"> notable companies reporting ahead of the market open.</a></li>
<li>Those reporting after the close include SkyWest, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/SKYW#NASDAQ">SKYW</a>), Juniper Networks, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/JNPR#NYSE">JNPR</a>), Deckers Outdoor Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DECK#NYSE">DECK</a>), Boyd Gaming Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BYD#NYSE">BYD</a>), BJ&#8217;s Restaurants, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/BJRI#NASDAQ">BJRI</a>) and VeriSign, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/VRSN#NASDAQ">VRSN</a>)</li>
</ul>
Commodities, Bonds And Global Equity Markets:
Crude oil futures fell sharply, dropping to the lowest since June 10 intraday, and gold futures also fell, retreating below the $2,400 mark. Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) fell toward the $64K level. The yield on the 10-year benchmark Treasury note was down 6.5 basis points to 4.22%. 
The major global equity markets were swathed in a sea of red, with the Asian markets, led lower by the Japanese markets, as traders in the regional markets fretted about the losses on Wall Street and expressed apprehensions ahead of key U.S. data. European stocks were deep in negative territory, stung by the negative global market sentiment and some disappointing earnings.
Read Next: 
<ul>
<li><a href="https://www.benzinga.com/markets/equities/24/07/39874391/tesla-alphabet-gm-ford-lead-earnings-parade-this-week-as-market-struggles-to-sustain-the-summer-">Tesla, Alphabet, GM, Ford Lead Earnings Parade This Week As Market Struggles To Sustain The Summer Rally</a></li>
</ul>
Photo Via Shutterstock

Futures

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Movers

$BTC

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ORLY

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VRSN

Nasdaq, S&P Futures Slide On More Negative Tech Tidings As Focus Shifts To Q2 GDP Data: Strategist Says Trump Trades May Not Work Even If Ex-President Retakes White House

Meritage Homes Sees FY24 EPS $19.80-$21.00 Vs $20.00 Est.; Revenue $6.1B-$6.3B Vs $6.19B Est.

Meritage Homes (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>) reported quarterly earnings of $6.31 per share which beat the analyst consensus estimate of $4.97 by 26.96 percent. The company reported quarterly sales of $1.693 billion which beat the analyst consensus estimate of $1.571 billion by 7.74 percent. This is a 8.04 percent increase over sales of $1.567 billion the same period last year.

Meritage Homes Q2 2024 GAAP EPS $6.31 Beats $4.97 Estimate, Sales $1.693B Beat $1.571B Estimate

Wall Street experienced a turbulent session on Wednesday, with the S&amp;P 500 index heading toward its worst performance in over a year and the tech-focused Nasdaq 100 eyeing its fifth decline in <a href="https://www.benzinga.com/markets">the last six sessions.</a>
The Magnificent Seven group — Microsoft Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MSFT#NYSE">MSFT</a>), Apple Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AAPL#NASDAQ">AAPL</a>), NVIDIA Corp., Alphabet Inc., Amazon Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/AMZN#NASDAQ">AMZN</a>), Meta Platforms Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/META#NASDAQ">META</a>) and Tesla, Inc. — wiped out over $570 billion in their combined market valuation by midday trading in New York. The Roundhill Magnificent Seven ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MAGS#NYSE">MAGS</a>) fell 4.9%, marking the worst daily performance since the fund&#8217;s inception last year.
Tesla shares plummeted over 11% after missing earnings expectations, with revenue dropping 7% year-over-year to $19.9 billion. This marks its second consecutive quarter of year-over-year sales declines and the first sequential decline in quarterly sales volume.
Despite posting stronger-than-expected numbers, Alphabet also saw a significant drop, falling 5%, weighed down by its YouTube advertising revenue, which failed to meet analyst expectations.
The Nasdaq 100 fell 3%, eyeing a similar decline to the one witnessed a week ago. The drop in tech companies also impacted the chipmaker industry, which heavily depends on AI-related investments from mega-cap tech giants. The iShares Semiconductor ETF (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SOXX#NYSE">SOXX</a>) fell 3.3%, approaching its lowest close since early June.
The CBOE Volatility Index or VIX, commonly referred to as the market fear index, rallied 16% to 17 points.
On the macro front, flash PMI surveys revealed the strongest pace of growth for the services sector in 28 months, while manufacturing activity <a href="https://www.benzinga.com/analyst-ratings/analyst-color/24/07/39934981/us-services-activity-hits-28-month-peak-price-pressures-continue-to-ease-economist-">returned to contraction in July.</a>
Treasury yields fell, sending a trade-weighted U.S. dollar gauge down 0.3%. Notably, the dollar fell 1.4% against the Japanese yen, eyeing levels last seen in early May. 
Gold showed its resilience against market turbulence, rising 0.6%. Bitcoin (CRYPTO: <a class="ticker" href="https://www.benzinga.com/quote/btc/usd">BTC</a>) rose 0.4%. 
<h3 class="wp-block-heading">Wednesday&#8217;s Performance In Major US Indices, ETFs</h3>
<figure class="wp-block-table is-style-stripes"> 
<table>
<tbody>
<tr>
<td>Major Indices</td>
<td>Price</td>
<td>1-day %chg</td>
</tr>
<tr>
<td>Russell 2000</td>
<td>2,242.07</td>
<td>-0.3%</td>
</tr>
<tr>
<td>Dow Jones</td>
<td>40,045.39</td>
<td>-0.8%</td>
</tr>
<tr>
<td>S&amp;P 500</td>
<td>5,461.51</td>
<td>-1.7%</td>
</tr>
<tr>
<td>Nasdaq 100</td>
<td>19,171.24</td>
<td>-3.0%</td>
</tr>
</tbody>
</table>
<figcaption class="wp-element-caption">Updated at 12:05 p.m. ET</figcaption></figure>
According to <a href="http://www.benzinga.com/pro/register/?utm_source=BZprocontent072424&amp;t=be2bearmibe3na1">Benzinga Pro</a> data:
<ul>
<li>The&nbsp;SPDR S&amp;P 500 ETF Trust&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/SPY#NYSE">SPY</a>)&nbsp;was 1.8% down to $543.94.</li>
<li>The&nbsp;SPDR Dow Jones Industrial Average&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/DIA#NYSE">DIA</a>)&nbsp;edged down 0.8% to $400.13.</li>
<li>The tech-heavy&nbsp;Invesco QQQ Trust&nbsp;(ARCA:&nbsp;<a href="https://www.benzinga.com/quote/qqq" target="_blank" rel="noreferrer noopener"></a><a href="https://www.benzinga.com/quote/qqq" target="_blank" rel="noreferrer noopener"></a>QQQ) fell 3% to $466.46.</li>
<li>Sector-wise, the Utilities Select Sector SPDR Fund&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLU#NYSE">XLU</a>)&nbsp;outperformed, up by 1.3%, while the&nbsp;Technology Select Sector SPDR Fund&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLK#NYSE">XLK</a>) and the Consumer Discretionary Select Sector SPDR Fund&nbsp;(NYSE:<a class="ticker" href="https://www.benzinga.com/stock/XLY#NYSE">XLY</a>) lagged, both down 3.2%.</li>
</ul>
<h3 class="wp-block-heading">Wednesday&#8217;s Stock Movers</h3>
Stocks moving on earnings were: 
<ul>
<li>Visa Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/V#NYSE">V</a>), down over 4%.</li>
<li>Texas Instruments Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/TXN#NASDAQ">TXN</a>) up 0.6%.</li>
<li>Chubb Ltd. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CB#NYSE">CB</a>), down 0.4%. </li>
<li>Capital One Financial Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/COF#NYSE">COF</a>), up 2.3%. </li>
<li>Thermo Fisher Scientific Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/TMO#NYSE">TMO</a>) up 3.2%.</li>
<li>AT&amp;T Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/T#NYSE">T</a>) up 5.4%.</li>
<li>Boston Scientific Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/BSX#NYSE">BSX</a>) down 2%. </li>
<li>Fiserv Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/FI#NYSE">FI</a>) up 2.2%. </li>
<li>CME Group Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CME#NASDAQ">CME</a>) up 0.8%, </li>
<li>General Dynamics Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GD#NYSE">GD</a>) down 4%. </li>
<li>Roper Technologies Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ROP#NASDAQ">ROP</a>) down 9%. </li>
<li>Old Dominion Freight Line, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ODFL#NASDAQ">ODFL</a>) up 2.9%. </li>
<li>GE Vernova Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/GEV#NYSE">GEV</a>) up 0.7%. </li>
<li>Vertiv Holdings Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/VRT#NYSE">VRT</a>) down 9%.</li>
<li>Check Point Software Technologies Ltd. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/CHKP#NASDAQ">CHKP</a>) up 7%. </li>
</ul>
Those reporting after the close include: 
<ul>
<li>International Business Machines Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/IBM#NYSE">IBM</a>)</li>
<li>ServiceNow, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NOW#NYSE">NOW</a>) ORLY) </li>
<li>KLA Corp. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/KLAC#NASDAQ">KLAC</a>)</li>
<li>Chipotle Mexican Grill, Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/CMG#NYSE">CMG</a>)</li>
<li>Republic Services Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/RSG#NYSE">RSG</a>)</li>
<li>Newmont Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/NEM#NYSE">NEM</a>)</li>
<li>Edwards Lifesciences Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/EW#NYSE">EW</a>)</li>
<li>Ford Motor Co. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/F#NYSE">F</a>)</li>
<li>Knight-Swift Transportation Holdings Inc. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/KNX#NYSE">KNX</a>)</li>
<li>Las Vegas Sands Corp. (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/LVS#NYSE">LVS</a>)</li>
<li>Meritage Homes Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/MTH#NYSE">MTH</a>)</li>
<li>Whirlpool Corporation (NYSE:<a class="ticker" href="https://www.benzinga.com/stock/WHR#NYSE">WHR</a>)</li>
<li>O&#8217;Reilly Automotive, Inc. (NASDAQ:<a class="ticker" href="https://www.benzinga.com/stock/ORLY#NASDAQ">ORLY</a>).</li>
</ul>
Read now:
<ul>
<li><a href="https://www.benzinga.com/news/large-cap/24/07/39931211/mortgage-rates-hit-lowest-point-since-february-as-investors-anticipate-fed-rate-cuts">Mortgage Rates Hit Lowest Point Since February As Investors Anticipate Fed Rate Cuts</a></li>
</ul>
Photo via Shutterstock.

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US Stocks Tumble, Magnificent 7 Wipe Out $570 Billion As Mega-Tech Earnings Disappoint, VIX Spikes: What's Driving Markets Wednesday?

U.S. home sales to stay sluggish until mortgage rates move closer to 6%: Fannie Mae

Meritage Homes declares $0.75 dividend

The residential construction market is experiencing substantial growth due to rising urbanization, favorable mortgage conditions, and supportive government measures. Could it be worth adding Meritage Homes to one's portfolio in this dynamic environment? Let's find out... As housing demand soars, the residential construction sector in the United States is poised for significant growth in the coming years. In this dynamic landscape, keeping an eye on Meritage Homes Corporation (<a href="https://stocknews.com/stock/MTH/">MTH</a>) could be a strategic move. To evaluate its potential, let's delve more closely into current industry trends and MTH's role.
The residential construction industry is expanding robustly, driven by several key factors. Increasing population levels, urbanization, and shifting demographics fueling heightened demand for new housing. Additionally, a growing desire for modern, energy-efficient homes is growing, further accelerating the sector's expansion.
Recent developments have further supported this growth. Mortgage rates <a href="https://www.forbes.com/advisor/mortgages/mortgage-rates/#:~:text=Mortgage%20rates%20took%20a%20tumble%20this%20summer%2C%20hitting,we%20move%20through%20the%20second%20half%20of%202024.">dropped to their lowest levels</a> in nearly 15 months this summer, benefiting prospective buyers. Although rates remain elevated, the Federal Reserve has signaled a potential cut in its key interest rate, which could lead to a further decline in mortgage rates in the latter half of 2024.
Moreover, the industry receives substantial backing from the government. The Department of Housing and Urban Development (HUD) launched the $100 million Pathways to Removing Obstacles to Housing (PRO Housing) program to address barriers to affordable housing production.
In June, Vice President Harris announced the first grants from this program, providing <a href="https://www.whitehouse.gov/briefing-room/statements-releases/2024/08/13/fact-sheet-biden-harris-administration-takes-new-actions-to-lower-housing-costs-by-cutting-red-tape-to-build-more-housing/">$85 million to over 20 cities and states</a> to overcome obstacles to building affordable housing.
In terms of industry performance, privately-owned housing completions in July reached a seasonally adjusted annual rate of 1,529,000, marking <a href="https://www.census.gov/construction/nrc/pdf/newresconst.pdf">a 13.8% increase</a> from July 2023. Single-family housing completions were at a rate of 1,054,000, up 0.5% from the revised June rate of 1,049,000.
Looking ahead, the residential real estate market in the United States is projected to reach a value of <a href="https://www.statista.com/outlook/fmo/real-estate/residential-real-estate/united-states">$106.70 trillion by 2024</a>. This projection reflects a steady annual growth rate of 3.6% from 2024 to 2029, with an anticipated market volume of $127.40 trillion by 2029.
Given these trends, MTH stands to benefit significantly. With a market capitalization of $6.53 billion, MTH is the fifth-largest homebuilder in the United States, specializing in designing and constructing single-family homes.
Its Homebuilding segment focuses on land acquisition, construction, marketing, and customer service, while the Financial Services segment offers essential services such as title, escrow, mortgage, and insurance.
MTH's shares have shown promising performance, increasing 19.5% over the past six months and 26.2% over the past year to close the last trading session at $179.76. Let's now explore the factors that might influence MTH's performance in the near term.
Recent Developments
On August 6, MTH entered into a multi-year exclusive<a href="https://www.prnewswire.com/news-releases/james-hardie-building-products-inc-announces-exclusive-product-deal-with-meritage-homes-302214820.html"> agreement with James Hardie Building Products Inc</a>., a subsidiary of James Hardie Industries plc (<a href="https://stocknews.com/stock/JHX/">JHX</a>), a North American leader in home-building products. The partnership builds on their existing relationship and expands their collaboration.
Under this agreement, Hardie&#xAE; siding and trim will be the standard for every new MTH home with hard siding across the United States through 2027. The standardization aims to enhance product consistency and quality in MTH's homes.
Moreover, the alliance is set to drive MTH's growth by reinforcing its commitment to premium materials. By standardizing Hardie&#xAE; products, MTH is poised to expand its market presence and solidify its reputation for high-quality home-building solutions.
Sound Historical Growth
Over the past five years, MTH's revenue has grown at a CAGR of 13.2%. Its operation income (EBIT) and total assets increased at CAGRs of 30.7% and 14.8%, respectively. In addition, the company's <a href="https://www.investopedia.com/terms/e/ebitda.asp">EBITDA</a> rose at a CAGR of 28.9%.
Moreover, during the same time frame, the company's net income and EPS grew at respective CAGRs of 32.4% and 34.3%.
Robust Financials
In the fiscal 2024 second quarter, which ended on June 30, MTH's homebuilding segment saw total closing revenue rise 8.1% year-over-year to $1.69 billion. Earnings before income taxes grew 24.1% to $297.36 million, and net earnings increased 23.9% to $231.56 million.
Earnings per common share also increased 25.7% year-over-year, reaching $6.31. Meanwhile, as of June 30, 2024, MTH's cash and cash equivalents totaled $992.92 million, up from $921.23 million on December 31, 2023.
Mixed Analyst Estimates
Analysts expect MTH's revenue for the fiscal third quarter (ending September 2024) to decrease 1.2% year-over-year to $1.59 billion. Similarly, its EPS for the same quarter is expected to decline 16.2% from the prior year's quarter to $5.01. Moreover, the company has surpassed the consensus revenue and EPS estimates in each of the trailing four quarters, which is impressive.
Looking forward, for the fiscal year ending December 2024, Street expects MTH's revenue and EPS to increase 3.3% and 5.6% from the previous year to $6.32 billion and $21.04, respectively.
Furthermore, the company's revenue and EPS for the next fiscal year ending in December 2025 are expected to grow 6.1% and 3.4% year-over-year to $6.70 billion and $21.76, respectively.
Mixed Profitability
MTH's trailing-12-month gross profit margin of 26.01% is 29.5% lower than the 36.89% industry average. Its trailing-12-month levered FCF margin of negative 4.06% unfavorably compares to the industry average of 5.58%.
However, the company's trailing-12-month EBITDA margin of 16.38% is 43% more than the industry average of 11.45%. Similarly, its trailing-12-month net income margin of 12.98% is 184.02% higher than the industry average of 4.57%.
Also, the stock's trailing-12-month ROCE, ROTC, and ROTA of 18.36%, 11.03%, and 12.11% are 59.6%, 80.6%, and 186.8% higher than the industry averages of 11.51%, 6.11%, and 4.22%, respectively.
Discounted Valuation 
In terms of forward non-GAAP P/E, MTH is trading at 8.54x, 44.7% lower than the industry average of 15.45x. The stock's forward EV/Sales multiple of 1.09 is 10% lower than the industry average of 1.22x. Likewise, its forward EV/EBITDA of 6.63x is 32.4% lower than the industry average of 9.81x.
Moreover, MTH's forward Price/Book of 1.27x is 48.8% lower than the 2.47x industry average. Meanwhile, its forward Price/Cash flow of 8.25x is 15% lower than the sector average of 9.70x.
POWR Ratings Reflect Uncertainty
MTH's mixed fundamentals are reflected in its <a href="https://stocknews.com/powr-ratings/">POWR Ratings</a>. The stock has an overall rating of C, which translates to Neutral in our proprietary rating system. The POWR Ratings are calculated by taking into account 118 different factors, with each factor weighted to an optimal degree.
Our proprietary rating system also evaluates each stock based on eight distinct categories. MTH has achieved an A grade in Momentum, which is evident from its robust stock price performance. Currently, the stock is trading higher than its 50-day and 200-day moving averages, which stand at $175.90 and $164.52, respectively.
In addition, the stock has a C grade for Quality, which is justified by its mixed profitability metrics. The stock also has a C grade in Sentiment, consistent with its mixed analyst estimates. Within the B-rated <a href="https://stocknews.com/category/homebuilders/">Homebuilders</a> industry, MTH is ranked #14 out of 23 stocks.
Beyond what I have stated above, we have also given MTH grades for Growth, Value, and Stability. Get all MTH ratings <a href="https://stocknews.com/stock/MTH/">here</a>.
Bottom Line
The residential construction sector is on a robust growth trajectory, fueled by urbanization, favorable mortgage rates, and government incentives. MTH is strategically positioned to take advantage of this expansion, thanks to its valuable partnerships.
However, with MTH's profitability showing fluctuations and its 60-month beta at 1.80 indicating higher volatility, investors might consider waiting for a more optimal entry point before buying the stock.
How Does Meritage Homes Corporation (MTH) Stack Up Against Its Peers?
Given the current uncertainty around MTH's near-term prospects, its potential to outperform in the coming weeks and months may be less clear. However, there are other industry peers with much more impressive POWR Ratings.
So, consider these three A (Strong Buy) and B (Buy) rated stocks from the Homebuilders industry: NVR, Inc. (<a href="https://stocknews.com/stock/NVR/">NVR</a>), M/I Homes, Inc. (<a href="https://stocknews.com/stock/MHO/">MHO</a>), and Tri Pointe Homes, Inc. (<a href="https://stocknews.com/stock/TPH/">TPH</a>). To explore more A &amp; B-rated homebuilding stocks, click <a href="https://stocknews.com/category/homebuilders/">here</a>.
What To Do Next?
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MTH shares were unchanged in premarket trading Monday. Year-to-date, MTH has gained 4.14%, versus a 17.36% rise in the benchmark S&amp;P 500 index during the same period.
<hr><div style="clear:both;"></div> <h2>About the Author: Aanchal Sugandh</h2> <img src='https:/wp-content/uploads/2022/12/Aanchal-Sugandh_Headshot.jpg' style="float:left; padding:5px;width:125px;">Aanchal's passion for financial markets drives her work as an investment analyst and journalist. She earned her bachelor's degree in finance and is pursuing the CFA program.

She is proficient at assessing the long-term prospects of stocks with her fundamental analysis skills. Her goal is to help investors build portfolios with sustainable returns.<a href="https://stocknews.com/authors/?author=aanchal-sugandh">More...</a>The post <a href=https://stocknews.com/news/mth-nvr-mho-tph-jhx-should-you-buy-meritage-homes-as-housing-demand-soars/>Should You Buy Meritage Homes as Housing Demand Soars?</a> appeared first on <a href=https://stocknews.com/>StockNews.com</a>

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Press Releases

Meritage Homes Announces Continued Partnership With Operation Homefront, Two Home Donations in Austin and Charlotte

Meritage Homes Second Quarter 2024 Earnings Conference Call and Webcast Scheduled for July 25, 2024

Meritage Homes Named ENERGY STAR® Partner of the Year For 11th Year & Honored for Highest Homebuyer Ratings in 21st Annual Avid Awards

Meritage Homes reports second quarter 2024 results

Meritage Homes Certified By Great Place To Work® For Second Year In a Row

James Hardie Building Products Inc. Announces Exclusive Product Deal with Meritage Homes

Dividends

Meritage Homes Announces Quarterly Cash Dividend

Meritage Homes Releases Fourth Annual Environmental, Social, and Governance Report

General

Operation Homefront Selects Two Military Families to Receive Mortgage-Free Meritage Homes in Austin and Charlotte

Meritage Homes Third Quarter 2024 Earnings Conference Call and Webcast Scheduled for October 30, 2024

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Meritage Homes (MTH) Forecast

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