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For the first quarter ended March 31, 2024, Meritage Homes posted earnings per share (EPS) of $5.06, significantly outperforming the analyst estimate of $3.55. This figure represents a 43% increase from the $3.54 EPS reported in the same quarter last year. Revenue also saw a notable increase, reaching $1.47 billion against the consensus estimate of $1.28 billion, marking a 16% rise from the previous year’s $1.26 billion and reflecting a 21% increase in homes closed.
The company’s success in the first quarter is attributed to a strategic approach to building and a favorable market condition, as noted by CEO Phillippe Lord. “Executing on our spec building and streamlined strategy, we delivered 3,507 homes in the first quarter of 2024—of which nearly 50% came from intra-quarter sales orders—and yet another record backlog conversion rate of 138%,” Lord said. The company also reported a home closing gross margin improvement of 340 basis points to 25.8%, driven by reduced financing incentives and lower direct costs.
Looking ahead, Meritage Homes provided an optimistic guidance for the full year 2024, projecting an EPS range of $19.20 to $20.70, which exceeds the analyst consensus of $17.69. The company also anticipates home closing revenue between $6 billion and $6.2 billion, with the midpoint slightly above the consensus estimate of $6.094 billion.
The company’s financial health is further underscored by its balance sheet, showing over $905 million in cash and a low net debt-to-capital ratio of 2.0%. The strong quarter has enabled Meritage Homes to continue its shareholder return strategy, repurchasing shares and increasing its quarterly dividend.
Investors have responded positively to the company’s performance and guidance, as reflected in the stock’s upward movement. Meritage Homes’ focus on energy-efficient and affordable homes, along with its strategic land acquisitions, positions it well to capitalize on the ongoing demand for new housing in the U.S. market.
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