Meritage Homes Q2 Adj. EPS $1.42 Beats $1.29 Estimate

Meritage Homes Corporation (NYSE: MTH) reported second-quarter 2026 adjusted diluted earnings per share (EPS) of $1.42, beating the analyst consensus estimate of $1.29 by 10.08 percent. Despite a 38 percent decline in net earnings to $91 million, driven by volatile interest rates and macroeconomic uncertainty, the Scottsdale-based homebuilder’s operational efficiency allowed it to exceed market expectations for profitability.

The company closed 3,725 homes, generating $1.4 billion in revenue, a 14 percent year-over-year decrease. While reported diluted EPS fell 33 percent to $1.37 from $2.04 in the same period last year, the adjusted figure excludes $3.6 million in real estate inventory impairments and $0.3 million in terminated land deal walk-away charges. The beat highlights management’s ability to control costs amidst softer buyer demand.

Financial Performance Overview

Metric	Q2FY26	Q2FY25	YoY Change
Net Earnings	$91 million	$147 million	-38%
Diluted EPS	$1.37	$2.04	-33%
Adjusted Diluted EPS	$1.42	$2.09	-32.06%
Home Closing Revenue	$1.4 billion	$1.6 billion	-14%
Homes Closed	3,725	4,170	-11%
Gross Margin	18.3%	21.1%	-280 bps

Home closing gross margin contracted by 280 basis points to 18.3 percent, primarily due to lost leverage on lower revenue and higher lot costs. This was partially offset by direct cost savings and quicker cycle times. Selling, general, and administrative (SG&A) expenses rose as a percentage of revenue to 10.4 percent from 10.2 percent, reflecting lost leverage on lower home closing revenue, though this was mitigated by decreased compensation expense and an intentional pullback in discretionary spending.

What the Numbers Show

The divergence between the modest revenue miss relative to prior year volume and the sharper earnings decline highlights fixed cost pressures. While home closing revenue decreased by 14 percent, net earnings fell by 38 percent, indicating that operating leverage turned negative as volumes declined. However, the ability to deliver an adjusted EPS of $1.42 against a $1.29 estimate suggests that non-recurring items and core operational adjustments played a significant role in preserving profitability. The effective income tax rate increased slightly to 24.8 percent from 23.9 percent due to higher state income taxes.

Balance Sheet and Shareholder Returns

Meritage Homes reinforced its liquidity position by refinancing its revolving credit facility, increasing the size to $980 million and extending maturity to 2031. The company ended the quarter with $807 million in cash and no borrowings under its revolving credit facility, resulting in a net debt-to-capital ratio of 17.1 percent. Commitment to shareholder returns remained steadfast; the company repurchased 1,528,340 shares for $100 million and paid quarterly cash dividends of $0.48 per share, totaling $31 million. Year-to-date, the company has returned $293 million to shareholders through buybacks and dividends.

Looking ahead, Meritage reiterated its expectation for community count growth of 5-10 percent year-over-year for full year 2026, despite moderating land spend to $357 million in the quarter from $509 million in the prior year period. Book value per share increased 5 percent year-over-year to June 30, 2026.