Meritage Homes started 2025 by delivering results that met or slightly exceeded Wall Street’s expectations for both revenue and adjusted earnings, despite a 7.5% year-over-year decline in sales. Management attributed the performance to its focus on move-in ready homes and a 60-day closing commitment, which helped drive strong backlog conversion and maintain steady sales activity amid volatile mortgage rates and cautious consumer sentiment. CEO Phillippe Lord emphasized, “We were able to achieve 4.4 net sales per month in what I believe to be very difficult market conditions.”
Is now the time to buy MTH? Find out in our full research report (it’s free).
Meritage Homes (MTH) Q1 CY2025 Highlights:
- Revenue: $1.36 billion vs analyst estimates of $1.33 billion (7.5% year-on-year decline, 2.4% beat)
- Adjusted EPS: $1.69 vs analyst estimates of $1.68 (0.9% beat)
- Adjusted EBITDA: $165.4 million vs analyst estimates of $170.7 million (12.1% margin, 3.1% miss)
- The company reconfirmed its revenue guidance for the full year of $6.75 billion at the midpoint
- Operating Margin: 11%, down from 15.3% in the same quarter last year
- Backlog: $812.4 million at quarter end, down 34.7% year on year
- Market Capitalization: $4.49 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Meritage Homes’s Q1 Earnings Call
-
Unidentified Analyst (Zelman & Associates) asked about the expectation for higher average closing prices versus Q1. CFO Hilla Sferruzza clarified that the increase is primarily due to mix, not broad pricing power, although targeted price increases have occurred in certain markets.
-
Stephen Kim (Evercore ISI) questioned the timing and volume impact of new community openings. CEO Phillippe Lord explained that most community count growth—and the resulting sales volume—will ramp in the second half of the year, with strong demand expected at new locations.
-
Michael Rehaut (JPMorgan) probed what differentiates Meritage’s performance versus peers who have reduced guidance. Lord attributed resilience to move-in ready inventory, which provides buyers with certainty and addresses affordability, while noting that incentive levels and sales commissions are managed on a community-specific basis.
-
Trevor Allinson (Wolf Research) asked if the 60-day move-in guarantee is a competitive advantage in markets with higher resale inventory. Lord and Sferruzza pointed to increased repeat business from realtors and said the guarantee offers agents and buyers more certainty, supporting sales pace.
-
Alex Barron (Housing Research Center) pressed on how Meritage is responding to competitors’ price cuts. Lord said the company is generally using interest rate buy-downs instead of price reductions, as these are more effective for buyers’ monthly payments and less costly for Meritage.
Catalysts in Upcoming Quarters
In the coming quarters, our team will be watching (1) the pace and effectiveness of new community launches, especially in core markets like Nashville and the Gulf Coast; (2) whether Meritage can maintain its targeted sales pace without increasing incentives or sacrificing further margin; and (3) how supply chain costs, labor availability, and potential tariffs may impact gross margins and operational efficiency. Any shifts in consumer sentiment or mortgage rates will also be key factors to monitor.
Meritage Homes currently trades at $62.57, down from $68.17 just before the earnings. Is there an opportunity in the stock?The answer lies in our full research report (it’s free).
High-Quality Stocks for All Market Conditions
Market indices reached historic highs following Donald Trump’s presidential victory in November 2024, but the outlook for 2025 is clouded by new trade policies that could impact business confidence and growth.
While this has caused many investors to adopt a "fearful" wait-and-see approach, we’re leaning into our best ideas that can grow regardless of the political or macroeconomic climate. Take advantage of Mr. Market by checking out our Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).
Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-small-cap company Exlservice (+354% five-year return). Find your next big winner with StockStory today.
