Meritage Stock Earnings Reports

Meritage reported Q1 2026 results with 3,664 sales orders (down 5% YoY), 2,967 homes delivered and home closing revenue of $1.1 billion (down 17% YoY). Home closing gross margin was 17.5% (down ~400 bps YoY) and diluted EPS was $0.82 (down 51% YoY). Management highlighted record community count (345 at quarter-end, +19% YoY), continued emphasis on its 60-day closing guarantee and move-in-ready/spec-focused go-to-market, and a very strong backlog conversion rate (254%) driven by faster cycle times. They materially reduced completed spec inventory (about 4,700 specs, ~14 specs per store, lowest since early 2022) and moderated starts (~2,500 homes in Q1, down 30% YoY) to align supply with demand. Balance sheet: cash $767M, net debt-to-cap 17.4%, owned/controlled lots ~75,500 (~5.2 years of supply) with ~14,600 lots in diligence. Land spend in Q1 was $326M (down ~30% YoY) and they continue to be selective on land, with up to $2B of land acquisition/development spend planned for 2026. Capital allocation: returned $162M to shareholders in Q1 via buybacks ($130M) and dividends ($32M); repurchased shares at ~6% discount to book value and plan to buy ~$100M per remaining quarter in 2026. Guidance: full-year 2026 closings/revenue expected to be at or within ±5% of 2025; Q2 guidance of 3,650–3,900 closings, $1.37–$1.47B revenue, gross margin around 18%, tax rate ~24.5–25%, and EPS $1.18–$1.46. Management reiterated long-term targets (SG&A ~9.5% of revenue, normalized gross margin 22.5–23.5%) and expects margin relief beginning toward the tail end of 2027 as land basis and development costs moderate. Key risks: fragile consumer psychology sensitive to interest rate and geopolitical moves, incentive-driven pricing pressure, and elevated land basis in more recent vintages.