Validea's Top Consumer Discretionary Stocks Based On Benjamin Graham - 9/19/2024
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 19 2024
0mins
Source: NASDAQ.COM
Top Rated Consumer Discretionary Stocks: Validea's Value Investor model, based on Benjamin Graham's strategy, identifies several mid-cap value stocks in the Consumer Discretionary sector, including Meritage Homes Corp, Asbury Automotive Group, Foot Locker Inc, and Century Communities Inc, all rated at 71% based on their fundamentals and valuations.
About Benjamin Graham and Validea: Benjamin Graham, known as the "Father of Value Investing," influenced many successful investors and developed a methodology that continues to guide investment strategies today, while Validea provides stock analysis and model portfolios based on the principles of renowned investors.
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Analyst Views on MTH
Wall Street analysts forecast MTH stock price to rise
6 Analyst Rating
2 Buy
4 Hold
0 Sell
Moderate Buy
Current: 64.860
Low
74.00
Averages
85.50
High
104.00
Current: 64.860
Low
74.00
Averages
85.50
High
104.00
About MTH
Meritage Homes Corporation is a designer and builder of single-family attached and detached homes. The Company’s segments include homebuilding and financial services. The homebuilding segment is engaged in the business of acquiring and developing land, constructing homes, marketing and selling those homes and providing warranty and customer services. It has operations in three regions: West, Central and East, which are comprised of 12 states: Arizona, California, Colorado, Utah, Texas, Alabama, Florida, Georgia, Mississippi, North Carolina, South Carolina, and Tennessee. These three regions are its principal homebuilding segments. The financial services segment offers title and escrow, mortgage, and insurance services. Its financial services operations also provide mortgage services to its homebuyers through an unconsolidated joint venture. The Company’s homebuilding activities are conducted under the name of Meritage Homes in each of its homebuilding markets.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Meritage Homes Q1 2026 Earnings Call Insights
- Sales Order Decline: Meritage Homes reported Q1 sales orders of 3,664 units, a 5% decrease from the previous year, indicating that consumer confidence has been negatively impacted in a challenging market environment, necessitating higher incentives to capture near-term demand.
- Record Community Count: As of March 31, the number of active communities reached 345, setting a new company record, with expectations for community count growth of 5% to 10% in 2026, which will drive overall sales volume and revenue increases.
- Increased Shareholder Returns: Despite macroeconomic pressures, Meritage repurchased $130 million worth of common shares in Q1 and raised its dividend by 12% to $0.48 per share, demonstrating a strong commitment to shareholder value and proactive capital management.
- Margin Pressure Intensifies: The gross margin for Q1 was 17.5%, down 400 basis points from the prior year, primarily due to increased incentives and rising land costs, with expectations that this structural pressure will continue to impact profitability in 2026.
See More
Meritage Homes Q1 Earnings Miss Expectations
- Earnings Shortfall: Meritage Homes reported a Q1 non-GAAP EPS of $0.86, missing expectations by $0.12, indicating challenges in profitability amid current market conditions, which may affect investor confidence.
- Significant Revenue Decline: The company generated $1.11 billion in revenue for Q1, a 17.2% year-over-year decrease that fell short by $60 million, primarily due to lower home closing volumes and average sales prices, reflecting a weak demand environment.
- Decreased Orders: Orders for 3,664 homes in Q1 decreased by 5% year-over-year, driven by an 18% drop in average absorption pace, despite a 17% increase in average community count, highlighting intensified market competition and insufficient customer demand.
- Guidance Revision: The company has updated its guidance for full-year 2026 home closing volume and revenue to be within 5% of 2025 results based on current market conditions, indicating uncertainty and a cautious outlook for future performance.
See More
Meritage Homes Scheduled to Announce Q1 Earnings on April 22
- Earnings Announcement Date: Meritage Homes (MTH) is set to release its Q1 2023 earnings on April 22 after market close, with a consensus EPS estimate of $0.98, reflecting a significant 42% year-over-year decline, indicating substantial pressure on profitability.
- Revenue Expectations Decline: The consensus revenue estimate stands at $1.17 billion, down 12.7% year-over-year, highlighting weak demand in the housing market that could adversely affect overall performance.
- Historical Performance Review: Over the past year, MTH has beaten EPS estimates 75% of the time and revenue estimates 50% of the time, indicating relative stability in earnings forecasts but greater volatility in revenue projections.
- Expectation Revision Status: In the last three months, there have been no upward revisions for EPS estimates and five downward revisions, while revenue estimates also saw no upward revisions and six downward revisions, reflecting a diminishing market confidence in the company's future performance.
See More
New Home Sales Plummet Amid Rising Inventory
- Significant Sales Decline: According to the U.S. Census Bureau, new home sales dropped 17.6% month-over-month in January, reaching an annualized pace of 587,000 units, marking the slowest rate since 2022 and indicating a weakening market demand.
- Inventory Surge: The inventory of homes for sale rose to a 9.7-month supply, up from eight months in December, reflecting a supply-demand imbalance that could lead to further price declines in the housing market.
- Price Reduction Trend: The median price of new homes sold in January was $400,500, a 6.8% year-over-year decline, indicating that builders are forced to lower prices to attract buyers amid fierce competition, which may impact future profit margins.
- Regional Sales Disparities: Sales declined nationwide, with the Northeast and Midwest experiencing the largest drops, while the West saw nearly a 22% decrease from December, suggesting that weather factors had limited impact and highlighting deeper market issues.
See More
Meritage Homes Receives Buy Rating and Dividend Increase
- Initiation of Buy Rating: On March 4, Truist Securities initiated coverage on Meritage Homes Corp (NYSE:MTH) with a Buy rating and a price target of $90, citing the company's spec-only business model as a key factor for cost savings, appealing to investors interested in the lower-end housing market.
- Dividend Increase: Meritage Homes announced a quarterly dividend of $0.48 per share on February 19, marking a 12% increase from last year's $0.43, demonstrating financial stability, with the dividend scheduled for payment on March 31, 2026, enhancing shareholder return confidence.
- Earnings Report Performance: In its Q4 2025 earnings report, Meritage Homes posted adjusted EPS of $1.67, exceeding the consensus estimate of $1.53, although revenue of $1.41 billion fell short of the $1.49 billion projection, reflecting operational challenges in a tough market environment.
- Market Positioning: As one of the top five homebuilders in the U.S., Meritage Homes targets entry-level and first move-up home markets, focusing on delivering energy-efficient and affordable homes, having delivered over 210,000 homes in its 40-year history, showcasing its competitive strength and market impact.
See More
Truist Predicts Decline in Home Builder Revenue This Year, Yet Recommends These 4 Stocks for Purchase.
Home-builder revenue forecast: Home-builder revenue is expected to decline significantly in 2026 due to ongoing pressures in the housing market.
Investor opportunities: Despite the revenue drop, the situation presents a favorable opportunity for investors looking to target specific builders.
See More
Meritage Homes Q1 2026 Earnings Call Insights
- Sales Order Decline: Meritage Homes reported Q1 sales orders of 3,664 units, a 5% decrease from the previous year, indicating that consumer confidence has been negatively impacted in a challenging market environment, necessitating higher incentives to capture near-term demand.
- Record Community Count: As of March 31, the number of active communities reached 345, setting a new company record, with expectations for community count growth of 5% to 10% in 2026, which will drive overall sales volume and revenue increases.
- Increased Shareholder Returns: Despite macroeconomic pressures, Meritage repurchased $130 million worth of common shares in Q1 and raised its dividend by 12% to $0.48 per share, demonstrating a strong commitment to shareholder value and proactive capital management.
- Margin Pressure Intensifies: The gross margin for Q1 was 17.5%, down 400 basis points from the prior year, primarily due to increased incentives and rising land costs, with expectations that this structural pressure will continue to impact profitability in 2026.
See More
Meritage Homes Q1 Earnings Miss Expectations
- Earnings Shortfall: Meritage Homes reported a Q1 non-GAAP EPS of $0.86, missing expectations by $0.12, indicating challenges in profitability amid current market conditions, which may affect investor confidence.
- Significant Revenue Decline: The company generated $1.11 billion in revenue for Q1, a 17.2% year-over-year decrease that fell short by $60 million, primarily due to lower home closing volumes and average sales prices, reflecting a weak demand environment.
- Decreased Orders: Orders for 3,664 homes in Q1 decreased by 5% year-over-year, driven by an 18% drop in average absorption pace, despite a 17% increase in average community count, highlighting intensified market competition and insufficient customer demand.
- Guidance Revision: The company has updated its guidance for full-year 2026 home closing volume and revenue to be within 5% of 2025 results based on current market conditions, indicating uncertainty and a cautious outlook for future performance.
See More
Meritage Homes Scheduled to Announce Q1 Earnings on April 22
- Earnings Announcement Date: Meritage Homes (MTH) is set to release its Q1 2023 earnings on April 22 after market close, with a consensus EPS estimate of $0.98, reflecting a significant 42% year-over-year decline, indicating substantial pressure on profitability.
- Revenue Expectations Decline: The consensus revenue estimate stands at $1.17 billion, down 12.7% year-over-year, highlighting weak demand in the housing market that could adversely affect overall performance.
- Historical Performance Review: Over the past year, MTH has beaten EPS estimates 75% of the time and revenue estimates 50% of the time, indicating relative stability in earnings forecasts but greater volatility in revenue projections.
- Expectation Revision Status: In the last three months, there have been no upward revisions for EPS estimates and five downward revisions, while revenue estimates also saw no upward revisions and six downward revisions, reflecting a diminishing market confidence in the company's future performance.
See More
New Home Sales Plummet Amid Rising Inventory
- Significant Sales Decline: According to the U.S. Census Bureau, new home sales dropped 17.6% month-over-month in January, reaching an annualized pace of 587,000 units, marking the slowest rate since 2022 and indicating a weakening market demand.
- Inventory Surge: The inventory of homes for sale rose to a 9.7-month supply, up from eight months in December, reflecting a supply-demand imbalance that could lead to further price declines in the housing market.
- Price Reduction Trend: The median price of new homes sold in January was $400,500, a 6.8% year-over-year decline, indicating that builders are forced to lower prices to attract buyers amid fierce competition, which may impact future profit margins.
- Regional Sales Disparities: Sales declined nationwide, with the Northeast and Midwest experiencing the largest drops, while the West saw nearly a 22% decrease from December, suggesting that weather factors had limited impact and highlighting deeper market issues.
See More
Meritage Homes Receives Buy Rating and Dividend Increase
- Initiation of Buy Rating: On March 4, Truist Securities initiated coverage on Meritage Homes Corp (NYSE:MTH) with a Buy rating and a price target of $90, citing the company's spec-only business model as a key factor for cost savings, appealing to investors interested in the lower-end housing market.
- Dividend Increase: Meritage Homes announced a quarterly dividend of $0.48 per share on February 19, marking a 12% increase from last year's $0.43, demonstrating financial stability, with the dividend scheduled for payment on March 31, 2026, enhancing shareholder return confidence.
- Earnings Report Performance: In its Q4 2025 earnings report, Meritage Homes posted adjusted EPS of $1.67, exceeding the consensus estimate of $1.53, although revenue of $1.41 billion fell short of the $1.49 billion projection, reflecting operational challenges in a tough market environment.
- Market Positioning: As one of the top five homebuilders in the U.S., Meritage Homes targets entry-level and first move-up home markets, focusing on delivering energy-efficient and affordable homes, having delivered over 210,000 homes in its 40-year history, showcasing its competitive strength and market impact.
See More
Truist Predicts Decline in Home Builder Revenue This Year, Yet Recommends These 4 Stocks for Purchase.
Home-builder revenue forecast: Home-builder revenue is expected to decline significantly in 2026 due to ongoing pressures in the housing market.
Investor opportunities: Despite the revenue drop, the situation presents a favorable opportunity for investors looking to target specific builders.
See More
