Yahoo Finance Upgrade: Analysts Just Made A Captivating Increase To Their Meritage Homes Corporation (NYSE:MTH) Forecasts
Shareholders in Meritage Homes Corporation (NYSE:MTH) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. Consensus estimates suggest investors could expect greatly increased statutory revenues and earnings per share, with analysts modelling a real improvement in business performance. The market may be pricing in some blue sky too, with the share price gaining 15% to US$59.50 in the last 7 days. Could this upgrade be enough to drive the stock even higher?
Following the latest upgrade, the five analysts covering Meritage Homes provided consensus estimates of US$3.3b revenue in 2020, which would reflect a chunky 15% decline on its sales over the past 12 months. Statutory earnings per share are anticipated to tumble 27% to US$5.67 in the same period. Prior to this update, the analysts had been forecasting revenues of US$3.0b and earnings per share (EPS) of US$4.26 in 2020. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.
See our latest analysis for Meritage Homes
With these upgrades, we're not surprised to see that the analysts have lifted their price target 30% to US$56.86 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Meritage Homes analyst has a price target of US$67.00 per share, while the most pessimistic values it at US$44.00. Analysts definitely have varying views on the business, but the spread of estimates is not wide enough in our view to suggest that extreme outcomes could await Meritage Homes shareholders.
Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. We would highlight that sales are expected to reverse, with the forecast 15% revenue decline a notable change from historical growth of 9.0% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.3% annually for the foreseeable future. It's pretty clear that Meritage Homes' revenues are expected to perform substantially worse than the wider industry.
The Bottom Line
The biggest takeaway for us from these new estimates is that analysts upgraded their earnings per share estimates, with improved earnings power expected for this year. Fortunately, they also upgraded their revenue estimates, and are forecasting revenues to grow slower than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Meritage Homes could be worth investigating further.
Still, the long-term prospects of the business are much more relevant than next year's earnings. At Simply Wall St, we have a full range of analyst estimates for Meritage Homes going out to 2022, and you can see them free on our platform here..
We also provide an overview of the Meritage Homes Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.
If you spot an error that warrants correction, please contact the editor at editorial-team@simplywallst.com. This article by Simply Wall St is general in nature. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. Simply Wall St has no position in the stocks mentioned.
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