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Meritage Homes Corporation (NYSE:MTH) Fell Short of Analyst Expectations: Here's What You Need To Know
Meritage Homes Corporation (NYSE:MTH) just released its latest third-quarter report and things are not looking great. Meritage Homes missed analyst forecasts, with revenues of US$1.2b and statutory earnings per share (EPS) of US$1.04, falling short by 9.1% and 9.9% respectively. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. So we collected the latest post-earnings statutory consensus estimates to see what could be in store for next year.
Taking into account the latest results, the consensus forecast from Meritage Homes' nine analysts is for revenues of US$5.28b in 2027. This reflects a credible 2.7% improvement in revenue compared to the last 12 months. Per-share earnings are expected to increase 2.9% to US$4.76. Before this earnings report, the analysts had been forecasting revenues of US$5.65b and earnings per share (EPS) of US$5.51 in 2027. The analysts seem less optimistic after the recent results, reducing their revenue forecasts and making a substantial drop in earnings per share numbers.
View our latest analysis for Meritage Homes
Despite the cuts to forecast earnings, there was no real change to the US$71.50 price target, showing that the analysts don't think the changes have a meaningful impact on its intrinsic value. There's another way to think about price targets though, and that's to look at the range of price targets put forward by analysts, because a wide range of estimates could suggest a diverse view on possible outcomes for the business. There are some variant perceptions on Meritage Homes, with the most bullish analyst valuing it at US$90.00 and the most bearish at US$59.00 per share. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Meritage Homes shareholders.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. It's clear from the latest estimates that Meritage Homes' rate of growth is expected to accelerate meaningfully, with the forecast 2.2% annualised revenue growth to the end of 2027 noticeably faster than its historical growth of 0.8% p.a. over the past five years. By contrast, our data suggests that other companies (with analyst coverage) in a similar industry are forecast to grow their revenue at 6.4% per year. It seems obvious that, while the future growth outlook is brighter than the recent past, Meritage Homes is expected to grow slower than the wider industry.
The Bottom Line
The most important thing to take away is that the analysts downgraded their earnings per share estimates, showing that there has been a clear decline in sentiment following these results. Unfortunately, they also downgraded their revenue estimates, and our data indicates underperformance compared to the wider industry. Even so, earnings per share are more important to the intrinsic value of the business. The consensus price target held steady at US$71.50, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on Meritage Homes. Long-term earnings power is much more important than next year's profits. At Simply Wall St, we have a full range of analyst estimates for Meritage Homes going out to 2028, and you can see them free on our platform here..
It is also worth noting that we have found 1 warning sign for Meritage Homes that you need to take into consideration.
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