Meritage Homes to Report Q4 Earnings: What's in Store for the Stock?

Earnings Report and Estimates - Meritage Homes Corporation (MTH) is scheduled to report Q4 2024 results on Jan 29, after market close [1] - The Zacks Consensus Estimate for Q4 2024 EPS decreased to $2.25 from $2.27 in the past 30 days, indicating a 16.4% YoY decrease from $2.69 [3] - The consensus mark for revenues is pegged at $1.57 billion, indicating a 5.1% YoY decrease [3] Quarterly Performance and Factors - Total closing revenues decreased 2% YoY in the last reported quarter [2] - Q4 earnings and revenues are expected to decrease YoY due to affordability pressures and increased use of incentives [4] - The company expects home closings to be in the range of 3,750-3,950 units, down from 3,951 units a year ago [5] - Home closing revenues are anticipated to be in the $1.5-$1.59 billion range, down from $1.64 billion YoY [5] Segment-wise Performance - Homebuilding segment, which contributed 99.6% to total revenues in 2023, is predicted to drop 5.3% YoY to $1.57 billion [7] - Financial services revenues, which contributed 0.4% to total revenues in 2023, are expected to increase 8.8% YoY to $7.8 million [7] Margins and Incentives - Gross margins are forecasted to be in the range of 22.5% to 23.5%, down from Q3's 24.8% and the prior year's 25.2% [8] - Increased use of financing incentives, including rate buydowns, has weighed on the company's ASP [8] Backlogs and Home Orders - Home orders are expected to grow 24% to 3,587 units in Q4 2024 [9] - Total backlog is expected to decline 22% to 1,988 units, with the total backlog value decreasing 25% YoY to $816.2 million [9] Integration and Market Focus - Meritage Homes is integrating Elliott Homes, a private builder with a strong presence in the Gulf Coast markets [5] - The company's focus on the entry-level market, which remains structurally undersupplied, should continue to provide a steady stream of buyers [4] Earnings ESP and Zacks Rank - MTH has an Earnings ESP of -1.27% and a Zacks Rank 3, indicating no predicted earnings beat for the quarter [10] Other Companies in the Sector - Weyerhaeuser (WY) has an Earnings ESP of +1.01% and a Zacks Rank of 1, with expected Q4 2024 earnings to decrease 56.3% [11] - Sterling Infrastructure, Inc. (STRL) has an Earnings ESP of +2.99% and a Zacks Rank of 3, with expected Q4 2024 earnings to increase 3.1% [12] - PulteGroup, Inc. (PHM) has an Earnings ESP of +2.36% and a Zacks Rank of 3, with expected Q4 2024 earnings to decrease 2.1% [13]