In short: "Meritage, the home builder I have been recommending, reported… results were mixed positively." Gross margin and SG&A leverage beat, driving 4% upside to EPS of $1.42 (though earnings −30% YoY); orders −9% and revenue −14% were "a little shy." "But I think most importantly, free cash flow was significantly stronger than expected as the company has begun to dial back land spend in favor of increased share repurchases given the stock's discounted valuation" — $100M bought in the quarter (2% of shares), 5% YTD.
Meritage builds homes, mostly entry-level, and is Eisman's standing housing recommendation. The quarter was genuinely mixed: new orders fell 9% and revenue fell 14%, both slightly worse than expected, and profits were down 30% from last year.
What he weights instead is what the company did with its cash. Profit per share still beat by 4% because of better margins and tighter overhead, and free cash flow came in much stronger than expected — because management is deliberately buying less land and spending the money buying back shares while the stock is cheap. It repurchased $100 million in the quarter, 2% of the company, and 5% of all shares outstanding since January.
That is the mechanic worth understanding: in a weak housing market a builder can shrink its share count faster than its business shrinks, so profit per remaining share holds up. Land spending is discretionary; buying it back at a discount to what the land and homes are worth is the better use of the money.
17:12revenue was 9.6 billion up 41%. Company raised EPS and revenue guidance for the year. These are really powerful numbers and show how much the demand for increased electricity is impacting certain companies like Quant Meridage the home builder I have been recommending reported. Merid's 2Q26 results were mixed positively.
In short: His recommended homebuilder — pitched in the low $70s in January, fell to $62 on war/rates, now $74 at 1.0× tangible book vs recent M&A at 1.25–1.3× TBV. Homebuilders rallying on Berkshire M&A + the 10-year back below 4.5%.
Meritage is a US homebuilder, and one of the few names Eisman has actually recommended. Homebuilder stocks live and die by interest rates: he pitched it in the low $70s in January, watched it fall to $62 when war and higher rates hit, and it's now back to $74.
His value case is simple. "Tangible book value" is roughly what the company's hard assets are worth after debt. Meritage trades at about 1.0× that — i.e., the price equals the asset value — while recent takeovers of other homebuilders happened at 1.25–1.3× book. So it's cheap relative to what acquirers are paying, and the group is being lifted by Berkshire's dealmaking plus a 10-year Treasury yield back below 4.5%.
3:36Take the stock I've recommended, Meritage. I recommended it in the low 70s in January. The war and higher rates caused it to decline to $62. It's now 74 and valued at 1.0 times tangible book value. Recent M&A transactions have taken place at 1.25 to 1.3 times tangible book value. In private credit news, BlackRock capped redemptions from its HPS corporate lending fund at 5% after investors sought to pull 13% of their shares. And that is higher than the 9.3% they sought to redeem in the first quarter.
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