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Home Builders Stocks Q1 Teardown: Meritage Homes (NYSE:MTH) Vs The Rest


Jabin Bastian /
2024/07/04 8:46 am EDT

Earnings results often indicate what direction a company will take in the months ahead. With Q1 now behind us, let’s have a look at Meritage Homes (NYSE:MTH) and its peers.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a decent Q1; on average, revenues beat analyst consensus estimates by 3.8%. Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. The start of 2024 has been a different story as mixed signals have led to market volatility, and home builders stocks have had a rough stretch, with share prices down 7.1% on average since the previous earnings results.

Meritage Homes (NYSE:MTH)

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE:MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Meritage Homes reported revenues of $1.47 billion, up 14.8% year on year, topping analysts' expectations by 15.5%. It was a decent quarter for the company, with an impressive beat of analysts' earnings estimates but a miss of analysts' backlog sales estimates.

“Meritage has had a remarkable start to the year, generating an average absorption pace of 4.9 per month in the first quarter of 2024, which resulted in our highest quarterly sales orders,” said Steven J. Hilton, executive chairman of Meritage Homes.

Meritage Homes Total Revenue

Meritage Homes scored the biggest analyst estimates beat of the whole group. The stock is up 0.6% since the results and currently trades at $155.64.

Is now the time to buy Meritage Homes? Access our full analysis of the earnings results here, it's free.

Best Q1: Tri Pointe Homes (NYSE:TPH)

Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.

Tri Pointe Homes reported revenues of $939.4 million, up 20.5% year on year, outperforming analysts' expectations by 8.8%. It was a stunning quarter for the company, with an impressive beat of analysts' earnings estimates and a solid beat of analysts' backlog sales estimates.

Tri Pointe Homes Total Revenue

Tri Pointe Homes achieved the fastest revenue growth among its peers. The stock is up 0.9% since the results and currently trades at $36.48.

Is now the time to buy Tri Pointe Homes? Access our full analysis of the earnings results here, it's free.

Weakest Q1: Skyline Champion (NYSE:SKY)

Founded in 1951, Skyline Champion (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.

Skyline Champion reported revenues of $536.4 million, up 9.1% year on year, falling short of analysts' expectations by 4.4%. It was a weak quarter for the company, with a miss of analysts' earnings estimates and a miss of analysts' volume estimates.

Skyline Champion had the weakest performance against analyst estimates in the group. The stock is down 13.9% since the results and currently trades at $66.91.

Read our full analysis of Skyline Champion's results here.

NVR (NYSE:NVR)

Known for its unique land acquisition strategy, NVR (NYSE:NVR) is a respected homebuilder and mortgage company in the United States.

NVR reported revenues of $2.33 billion, up 7.1% year on year, surpassing analysts' expectations by 4.3%. It was a mixed quarter for the company, with a miss of analysts' backlog sales estimates.

The stock is down 3.8% since the results and currently trades at $7,456.99.

Read our full, actionable report on NVR here, it's free.

LGI Homes (NASDAQ:LGIH)

Based in Texas, LGI Homes (NASDAQ:LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.

LGI Homes reported revenues of $390.9 million, down 19.8% year on year, falling short of analysts' expectations by 4%. It was a slower quarter for the company, with a miss of analysts' earnings estimates.

LGI Homes had the slowest revenue growth among its peers. The stock is down 7.7% since the results and currently trades at $88.61.

Read our full, actionable report on LGI Homes here, it's free.

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