Meritage Homes Corp. reported fourth‑quarter 2025 results on January 28, 2026, closing 3,755 homes and generating $1.406 billion in home‑closing revenue. Adjusted diluted earnings per share rose to $1.67, beating the consensus estimate of $1.55. The company’s adjusted gross margin fell to 19.3 % from 23.3 % in the same quarter a year earlier, and it recorded $38.9 million in non‑recurring charges related to terminated land‑deal walk‑away expenses and inventory impairments.
The earnings beat was driven by disciplined cost management and a strong backlog conversion. CEO Phillippe Lord said the company achieved a 221 % backlog conversion rate and that 63 % of the 3,755 closings were intra‑quarter sales, underscoring efficient execution. The company’s operating leverage helped offset the margin compression, allowing EPS to rise even as revenue fell short of expectations.
Revenue missed the $1.51 billion estimate by roughly $110 million, a 7.3 % shortfall. Management attributed the miss to a slowdown in demand amid elevated mortgage rates and affordability constraints that dampened buyer activity. The company’s focus on affordable, move‑in‑ready homes has helped it capture market share from the resale segment, but the broader macro environment still weighed on top‑line growth.
Adjusted gross margin compression was largely a result of higher incentive costs and an elevated land basis. The 19.3 % margin in Q4 2025 compares to 23.3 % in Q4 2024, reflecting the impact of increased land acquisition costs and incentive spending that were not fully offset by pricing power. The company’s management emphasized that these costs are expected to normalize as the business scales.
Meritage returned $179 million to shareholders through share repurchases during the quarter, while maintaining $775 million in cash and no debt under its revolving credit facility. The company reiterated its guidance that full‑year 2026 home‑closing volume and revenue will be consistent with 2025, signaling confidence in its operational model despite the high‑rate environment. CEO Lord noted that the company believes its stock is undervalued and that share buybacks represent the most compelling use of capital.
Executive Chairman Steven J. Hilton highlighted the company’s strategy of offering affordable, energy‑efficient, move‑in‑ready homes as a key differentiator in a market where buyers face affordability challenges. He added that Meritage’s focus on capturing market share from the resale market positions it well for a potential rebound in demand as the economic backdrop improves.
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