Homebuilder Meritage Homes (NYSE: MTH) missed Wall Street’s revenue expectations in Q1 CY2026, with sales falling 18.1% year on year to $1.12 billion. Its non-GAAP profit of $0.86 per share was 11.9% below analysts’ consensus estimates.

Is now the time to buy Meritage Homes? Find out by accessing our full research report, it’s free.

"With the spring selling season commencing this quarter, we experienced some improved demand, achieving an absorption rate of 3.6 net sales per month and sales orders of 3,664 homes. However, these results were below our expectations as 2026 began with a severe winter storm in January and then transitioned into military operations in Iran midway through the quarter, which negatively impacted consumer sentiment and mortgage rates," said Steven J. Hilton, executive chairman of Meritage Homes.

Company Overview

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE: MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Revenue Growth

Reviewing a company’s long-term sales performance reveals insights into its quality. Any business can have short-term success, but a top-tier one grows for years. Over the last five years, Meritage Homes grew its sales at a sluggish 3.7% compounded annual growth rate. This was below our standard for the industrials sector and is a poor baseline for our analysis.

We at StockStory place the most emphasis on long-term growth, but within industrials, a half-decade historical view may miss cycles, industry trends, or a company capitalizing on catalysts such as a new contract win or a successful product line. Meritage Homes’s performance shows it grew in the past but relinquished its gains over the last two years, as its revenue fell by 5.8% annually.

Meritage Homes also reports its backlog, or the value of its outstanding orders that have not yet been executed or delivered. Meritage Homes’s backlog reached $711.5 million in the latest quarter and averaged 5,820% year-on-year growth over the last two years. Because this number is better than its revenue growth, we can see the company accumulated more orders than it could fulfill and deferred revenue to the future. This could imply elevated demand for Meritage Homes’s products and services but raises concerns about capacity constraints.

This quarter, Meritage Homes missed Wall Street’s estimates and reported a rather uninspiring 18.1% year-on-year revenue decline, generating $1.12 billion of revenue.

Looking ahead, sell-side analysts expect revenue to grow 1.4% over the next 12 months. Although this projection implies its newer products and services will catalyze better top-line performance, it is still below average for the sector.

ONE MORE THING: The $21 AI Application Stock Wall Street Forgot. While Wall Street obsesses over who’s building AI, one company is already using it to print money. And nobody’s paying attention.

AI chip stocks trade at ridiculous valuations. This company processes a trillion consumer signals monthly using AI and trades at a third of the price. The gap won’t last. The institutions will figure it out. You need to see this first. Read the FREE Report Before They Notice.

Operating Margin

Meritage Homes has been an efficient company over the last five years. It was one of the more profitable businesses in the industrials sector, boasting an average operating margin of 15.4%. This result was particularly impressive because of its low gross margin, which is mostly a factor of what it sells and takes huge shifts to move meaningfully. Companies have more control over their operating margins, and it’s a show of well-managed operations if they’re high when gross margins are low.

Looking at the trend in its profitability, Meritage Homes’s operating margin decreased by 11.8 percentage points over the last five years. This raises questions about the company’s expense base because its revenue growth should have given it leverage on its fixed costs, resulting in better economies of scale and profitability.

This quarter, Meritage Homes generated an operating margin profit margin of 6.5%, down 4.5 percentage points year on year. Since Meritage Homes’s gross margin decreased more than its operating margin, we can assume its recent inefficiencies were driven more by weaker leverage on its cost of sales rather than increased marketing, R&D, and administrative overhead expenses.

Earnings Per Share

Revenue trends explain a company’s historical growth, but the long-term change in earnings per share (EPS) points to the profitability of that growth – for example, a company could inflate its sales through excessive spending on advertising and promotions.

Sadly for Meritage Homes, its EPS declined by 2.2% annually over the last five years while its revenue grew by 3.7%. This tells us the company became less profitable on a per-share basis as it expanded due to non-fundamental factors such as interest expenses and taxes.

We can take a deeper look into Meritage Homes’s earnings to better understand the drivers of its performance. As we mentioned earlier, Meritage Homes’s operating margin declined by 11.8 percentage points over the last five years. This was the most relevant factor (aside from the revenue impact) behind its lower earnings; interest expenses and taxes can also affect EPS but don’t tell us as much about a company’s fundamentals.

Like with revenue, we analyze EPS over a more recent period because it can provide insight into an emerging theme or development for the business.

For Meritage Homes, its two-year annual EPS declines of 27.4% show it’s continued to underperform. These results were bad no matter how you slice the data.

In Q1, Meritage Homes reported adjusted EPS of $0.86, down from $1.69 in the same quarter last year. This print missed analysts’ estimates. Over the next 12 months, Wall Street expects Meritage Homes’s full-year EPS of $5.65 to grow 9.1%.

Key Takeaways from Meritage Homes’s Q1 Results

It was encouraging to see Meritage Homes beat analysts’ adjusted operating income expectations this quarter. On the other hand, its revenue missed and its EBITDA fell short of Wall Street’s estimates. Overall, this was a weaker quarter. The stock traded down 4.5% to $65.60 immediately following the results.

The latest quarter from Meritage Homes’s wasn’t that good. One earnings report doesn’t define a company’s quality, though, so let’s explore whether the stock is a buy at the current price. When making that decision, it’s important to consider its valuation, business qualities, as well as what has happened in the latest quarter. We cover that in our actionable full research report which you can read here (it’s free).