Meritage Homes Plunges 55.96% on Earnings Miss

On April 24, 2025, Meritage Homes experienced a significant drop of 55.96% in pre-market trading, marking a dramatic shift in investor sentiment towards the company.

Meritage Homes reported its first-quarter earnings for 2025, revealing a mixed performance that contributed to the stock's decline. The company's earnings and revenue surprises were -1.17% and 1.53%, respectively, for the quarter ended March 2025. Despite beating Wall Street's revenue expectations, the homebuilder saw a 7.9% year-on-year decrease in sales to $1.36 billion. This decline in sales was accompanied by a 3% decrease in the number of homes closed, from 3,507 in the same period last year to 3,416 in the first quarter of 2025.

The company's net earnings also took a hit, falling by 34% year-over-year. The first-quarter net income was reported at $122.81 million, or $1.69 per share, compared to $186.02 million, or $2.53 per share, in the previous year. This significant drop in earnings per share further exacerbated investor concerns about the company's financial health.

Meritage Homes' financial services segment, which includes title and escrow, mortgage, and insurance services, also faced challenges. The company's operations in three regions—West, Central, and East—spanning 10 states, showed a decline in key financial metrics. The average sales price of homes also decreased, adding to the overall negative sentiment surrounding the company.