Meritage Homes Corp Sees Profits Rise on a Strategic Pivot

The housing market continues to remain relatively healthy according to Meritage Homes Corp (NYSE: MTH), which reported financial and operating results for the second quarter on August 1. Meritage actually sold 2% fewer homes in the quarter, but a 3% increase in the average closing sales price offset the unit decline and kept revenue relatively flat year over year. It also -- along with an increase in spec homes (homes built before a customer had agreed to buy it) -- helped drive gross margin up 40 basis points year over year, and up 150 basis points from the first quarter. This increase in margin paid off, increasing earnings before taxes 7%, and earnings per share 3%.

The company didn't deliver on big unit or revenue growth in the quarter, but Chairman and CEO Steve Hilton pointed out that Meritage's new community count was up 7% at quarter-end, ahead of the 5% growth pace management is aiming for. The company also acquired 4,000 new lots, 70% of which will be used for communities targeting the growing entry-level buyer market.

Meritage is targeting the burgeoning first-time homebuyer population for future growth. Image source: Getty Images.

Source: Fool.com