Homebuilder Meritage Homes (NYSE:MTH) will be reporting earnings tomorrow after market close. Here’s what to look for.

Meritage Homes beat analysts’ revenue expectations by 2.9% last quarter, reporting revenues of $1.62 billion, down 2.3% year on year. It was a mixed quarter for the company, with an impressive beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.

Is Meritage Homes a buy or sell going into earnings? Read our full analysis here, it’s free.

This quarter, analysts are expecting Meritage Homes’s revenue to decline 9.7% year on year to $1.33 billion, a reversal from the 14.8% increase it recorded in the same quarter last year. Adjusted earnings are expected to come in at $1.68 per share.

Analysts covering the company have generally reconfirmed their estimates over the last 30 days, suggesting they anticipate the business to stay the course heading into earnings. Meritage Homes has a history of exceeding Wall Street’s expectations, beating revenue estimates every single time over the past two years by 10.1% on average.

Looking at Meritage Homes’s peers in the home builders segment, some have already reported their Q1 results, giving us a hint as to what we can expect. Lennar delivered year-on-year revenue growth of 4.4%, beating analysts’ expectations by 2%, and D.R. Horton reported a revenue decline of 15.1%, falling short of estimates by 3.9%. Lennar traded down 4% following the results while D.R. Horton was up 2.7%.

Read our full analysis of Lennar’s results here and D.R. Horton’s results here.

Inflation has progressed towards the Fed’s 2% goal as of late, leading to strong stock market performance. Recent rate cuts and the 2024 Presidential election's conclusion added further sparks to the market, and while some of the home builders stocks have shown solid performance, the group has generally underperformed, with share prices down 11.3% on average over the last month. Meritage Homes is down 10.6% during the same time and is heading into earnings with an average analyst price target of $95.84 (compared to the current share price of $65.50).

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