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Meritage Posts Blow-Out Quarter

The builder's earnings nearly double on better-than-expected margins.

Meritage Homes

(MTH) - Get Meritage Homes Corporation Report

surged nearly 8% Thursday after the homebuilder blew out analyst estimates by nearly doubling its fourth-quarter earnings.

The Scottsdale, Ariz.-based company reported net income of $102 million, or $3.53 a share, for its fourth quarter, up from $52 million, or $1.88 a share, a year earlier. Analysts had an average estimate fo earnings of $3.15 a share, according to Thomson First Call.

The company's revenue totaled $1.04 billion in the quarter, up 49% from a year earlier.

Meritage attributed the earnings beat to a wider-than-expected boost in gross margins, which improved to 24.6% from 20.5% a year earlier. The company's guidance had called for earnings of $2.88 to $3.13 for the quarter.

"Our homes are selling very well in Phoenix, where our active adult communities offer a great complement to our traditional, luxury and move-up communities," said Steven Hilton, Meritage's co-chairman and chief executive officer, in a statement. "In Texas, we're experiencing strong demand for all of our products in all four markets there. As Northern California appears to be normalizing after a period of accelerated growth, we're ramping up in Southern California after our acquisition there two years ago. Our latest entry into Florida last year added 12 new Meritage communities, and we expect to double Florida sales during our first full year there in 2006."

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The company maintained its 2006 EPS guidance of $11.25 to $11.50, within the range of analyst estimates.

Meritage shares recently were up $4.44, or 7.8%, to $61.74 early Thursday. The stock is still down from its $67 level reach earlier this month. Shares tanked after Meritage reported two weeks ago that its orders for the fourth quarter grew just 1%.

On Thursday, fellow homebuilder


(NVR) - Get NVR, Inc. Report

rose 4% after the company said its net income increased 40% in the fourth quarter and reported that orders grew 13% in its latest period.

Reston, Va.-based NVR said net income was $222.5 million, or $30.29 a share, compared with $158.9 million, or $20.13 per share a year earlier. Analysts expected earnings of $29.15 per share.

NVR shares rose $30.50 to $761.