Meritage Homes Corporation (NYSE:MTH) shareholders are probably feeling a little disappointed, since its shares fell 9.0% to US$151 in the week after its latest yearly results. Results overall were respectable, with statutory earnings of US$19.93 per share roughly in line with what the analysts had forecast. Revenues of US$6.1b came in 2.7% ahead of analyst predictions. The analysts typically update their forecasts at each earnings report, and we can judge from their estimates whether their view of the company has changed or if there are any new concerns to be aware of. We've gathered the most recent statutory forecasts to see whether the analysts have changed their earnings models, following these results.
Following last week's earnings report, Meritage Homes' nine analysts are forecasting 2024 revenues to be US$6.12b, approximately in line with the last 12 months. Statutory earnings per share are forecast to descend 10% to US$18.19 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$6.24b and earnings per share (EPS) of US$19.31 in 2024. The analysts seem to have become a little more negative on the business after the latest results, given the small dip in their earnings per share numbers for next year.
The consensus price target held steady at US$189, with the analysts seemingly voting that their lower forecast earnings are not expected to lead to a lower stock price in the foreseeable future. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Meritage Homes, with the most bullish analyst valuing it at US$219 and the most bearish at US$155 per share. As you can see, analysts are not all in agreement on the stock's future, but the range of estimates is still reasonably narrow, which could suggest that the outcome is not totally unpredictable.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that revenue is expected to reverse, with a forecast 0.3% annualised decline to the end of 2024. That is a notable change from historical growth of 14% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 4.6% annually for the foreseeable future. It's pretty clear that Meritage Homes' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest concern is that the analysts reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Meritage Homes. Fortunately, the analysts also reconfirmed their revenue estimates, suggesting that it's tracking in line with expectations. Although our data does suggest that Meritage Homes' revenue is expected to perform worse than the wider industry. There was no real change to the consensus price target, suggesting that the intrinsic value of the business has not undergone any major changes with the latest estimates.
Keeping that in mind, we still think that the longer term trajectory of the business is much more important for investors to consider. We have forecasts for Meritage Homes going out to 2026, and you can see them free on our platform here.
It is also worth noting that we have found 2 warning signs for Meritage Homes (1 is a bit unpleasant!) that you need to take into consideration.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.