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Strength Seen in Meritage (MTH): Can Its 11.7% Jump Turn into More Strength?

Meritage Homes Corporation MTH shares ended the last trading session 11.7% higher at $107. The jump came on an impressive volume with a higher-than-average number of shares changing hands in the session. This compares to the stock's 4.2% gain over the past four weeks.

Shares of Meritage Homes have surged after the company reported solid first-quarter 2021 results. Earnings of $3.44 per share topped the Zacks Consensus Estimate of $2.47 by 39.3% and surged 88% year over year. Moreover, the company announced a strong 2021 guidance. Revenues for 2021 are expected in the range of $4.55-$4.85 billion and earnings in the band of $13.75-$14.75 per share.

Price and Consensus

This homebuilder is expected to post quarterly earnings of $2.81 per share in its upcoming report, which represents a year-over-year change of +18.1%. Revenues are expected to be $1.12 billion, up 8.9% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For Meritage, the consensus EPS estimate for the quarter has been revised 1.1% lower over the last 30 days to the current level. And a negative trend in earnings estimate revisions doesn't usually translate into price appreciation. So, make sure to keep an eye on MTH going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>

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