As the Q2 earnings season wraps, let’s dig into this quarter’s best and worst performers in the home builders industry, including Meritage Homes (NYSE: MTH) and its peers.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.

Luckily, home builders stocks have performed well with share prices up 13.3% on average since the latest earnings results.

Meritage Homes (NYSE: MTH)

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.

Meritage Homes reported revenues of $1.63 billion, down 4% year on year. This print exceeded analysts’ expectations by 3%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.

Interestingly, the stock is up 4.7% since reporting and currently trades at $78.30.

Read our full report on Meritage Homes here, it’s free.

Best Q2: Champion Homes (NYSE: SKY)

Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.

Champion Homes reported revenues of $701.3 million, up 11.7% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a solid beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.

Champion Homes delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 13.3% since reporting. It currently trades at $74.98.

Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: Lennar (NYSE: LEN)

One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.

Lennar reported revenues of $8.38 billion, down 4.4% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a softer quarter as it posted a significant miss of analysts’ adjusted operating income estimates.

Interestingly, the stock is up 23.6% since the results and currently trades at $135.25.

Read our full analysis of Lennar’s results here.

Toll Brothers (NYSE: TOL)

Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE: TOL) is a luxury homebuilder across the United States.

Toll Brothers reported revenues of $2.95 billion, up 8% year on year. This print topped analysts’ expectations by 3.1%. Overall, it was a strong quarter as it also logged a beat of analysts’ EPS estimates.

The stock is up 5% since reporting and currently trades at $138.90.

Read our full, actionable report on Toll Brothers here, it’s free.

TopBuild (NYSE: BLD)

Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.

TopBuild reported revenues of $1.30 billion, down 5% year on year. This number was in line with analysts’ expectations. Overall, it was a strong quarter as it also put up full-year EBITDA guidance beating analysts’ expectations and an impressive beat of analysts’ EBITDA estimates.

TopBuild had the weakest performance against analyst estimates among its peers. The stock is up 10.3% since reporting and currently trades at $427.

Read our full, actionable report on TopBuild here, it’s free.

Market Update

As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.

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