Is Meritage Homes' (MTH) Streak of Beating Estimates Masking Deeper Growth Pressure?

• Earlier this week, Meritage Homes announced it will report third-quarter results on Tuesday, with analysts projecting a 7.6% year-over-year decline in revenue to US$1.47 billion and a continuation of recent slower growth trends.
• An interesting aspect is that Meritage Homes has managed to exceed Wall Street’s revenue expectations for eight straight quarters, consistently outperforming even with overall declines in revenue.
• We'll examine how Meritage Homes’ consistent outperformance of revenue estimates ahead of Q3 earnings may influence its broader investment narrative.

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Meritage Homes Investment Narrative Recap

Being a Meritage Homes shareholder today means believing in the company’s ability to expand community count and maintain a leading position in affordable, move-in-ready homes, despite ongoing affordability challenges and market headwinds. The latest news of a projected 7.6% year-over-year revenue decline underscores persistent demand-related pressures, but, for now, this does not materially alter the near-term catalyst of community growth or the immediate risk around shrinking gross margins from continued pricing incentives.

One of the most relevant recent announcements is the Board's August 2025 increase of Meritage’s share buyback plan by US$500 million to a total of US$1.25 billion. This move reinforces the capital allocation story that supports Meritage’s investment case and mitigates short-term pressures on share price, particularly as margin and backlog risks remain elevated.

In contrast, investors should also be mindful of the potential for sudden market demand shifts, especially given …

Read the full narrative on Meritage Homes (it's free!)

Meritage Homes is projected to reach $7.1 billion in revenue and $549.0 million in earnings by 2028. This outlook assumes a 4.8% annual revenue growth rate but reflects a decrease of $89.3 million in earnings from the current $638.3 million.

Uncover how Meritage Homes' forecasts yield a $83.88 fair value, a 17% upside to its current price.

Exploring Other Perspectives

Fair value estimates from four members of the Simply Wall St Community span from US$29.25 to US$225 per share, showcasing dramatic divergence in outlook. While current consensus highlights margin compression as a central risk, opinions in the market are far from settled, so you’ll want to consider these varied viewpoints.

Explore 4 other fair value estimates on Meritage Homes - why the stock might be worth over 3x more than the current price!

Build Your Own Meritage Homes Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Meritage Homes research is our analysis highlighting 2 key rewards and 3 important warning signs that could impact your investment decision.
• Our free Meritage Homes research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Meritage Homes' overall financial health at a glance.

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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.

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