Meritage Homes Shares Plunged: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of homebuilder Meritage Homes (NYSE: MTH  ) were being abandoned by investors today, falling as much as 14% in intraday trading before closing down 10.9%.

So what: The impetus for the stock market bludgeoning of Meritage's shares was the company's release of fourth-quarter earnings. Admittedly, considering we're talking about the homebuilding industry, there were some glimmers of hope in Meritage's results. Homes closed in the fourth quarter climbed 7% from 2010 to 894, while home-closing revenue increased 14% to $246 million. The bottom line was deep in the red with an $11.8 million loss, but that was due to a $13.9 million asset impairment the company recognized as it wound down its Las Vegas operations.

Of course, while the numbers were largely moving in the right direction, they were all increasing off very low bases. And as far as the stock goes, with both revenue and adjusted earnings per share missing analysts' estimates, shares didn't stand a chance in the wake of today's report.

Now what: Will the housing market bounce back? That's hardly an idle question for investors interested in Meritage. I don't see another big housing boom around the corner, but I think my fellow Fool Morgan Housel was onto something when he said that housing could be pretty close to the bottom.

Meritage management certainly expects that the year ahead will be better than the year passed. In the earnings press release, CEO Steven Hilton said that the company is "confident we can grow our sales, revenue, and earnings in 2012."

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