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Homebuilder Meritage posts higher 3Q profit

The Associated Press

NEWS: Meritage Homes Corp.'s net income surged nearly sixfold in the third quarter, as the homebuilder sold more homes at higher prices despite an uptick in mortgage interest rates that put off some would-be homebuyers.

DETAILS: Completed home sales increased 18 percent to 1,418 in the July-September period. The average sales price climbed 22 percent to $341,000. Signed contracts for new homes only rose 8 percent to 1,300, however. Management attributed the slowdown in orders to a rise in mortgage interest rates this summer and elevated home prices.

NUMBERS: Net income climbed to $38.2 million, or 99 cents per share, for the three months ended Sept. 30. That's up from $6.8 million, or 19 cents per share, a year earlier. Total closing revenue increased 43 percent to $492.1 million from $342.6 million. Analysts polled by FactSet expected earnings of 82 cents per share on revenue of $504.7 million.

FUTURE: Chairman and CEO Steven J. Hilton said he is confident that the housing market will continue to grow for the foreseeable future, noting the thin inventory of homes for sale in many markets. But added that the growth rate may not be as strong as last year and earlier this year.

The company increased its profit guidance for the year, projecting earnings per share between $2.95 and $3.05 on home closing revenue of about $1.8 billion. Previously Meritage forecast earnings per share in a range of $2.65 to $2.85 on revenue between $1.7 billion and $1.8 billion.

Analysts expect earnings per share of $2.82 on revenue of $1.83 billion.

STOCK: Shares of the Scottsdale, Ariz., builder added $1.99, or 4.6 percent, to $45.46 in afternoon trading. Shares are up 21 percent this year.