What happened

Shares of single-family-homes builder Meritage Homes (NYSE:MTH) jumped nearly 11% in Thursday trading before settling down to close the day up a still healthy 9.5%. But here's the thing: Meritage Homes didn't "beat earnings" today. It missed them -- and by a pretty substantial margin.

Expected to report profits of $1.37 per share on $899.6 million in sales, Meritage instead turned in a $1.33 profit on $884.6 million in its fiscal third quarter.

The beginning of a home under construction.

Meritage Homes' third quarter wasn't a "complete" success -- but it wasn't half bad. Image source: Getty Images.

So what

Why are investors bidding up a stock that missed earnings? I suspect the reason is, in part, that Meritage may not have done as well as Wall Street had hoped for but it didn't do too badly this past quarter, either.

Revenues grew 10% year over year and earnings were up 30% despite lower average sales prices on the homes closed in the quarter. CEO Steven Hilton noted that Meritage closed on "the second highest number of homes we've delivered in more than a decade" this past quarter. 

Now what

Meritage noted in its report that "the next couple of quarters may be more challenging" than what the company has enjoyed in the recent past. Accordingly, management lowered its revenue expectation to roughly $3.42 billion in sales through the end of this year -- below Wall Street's expected $3.59 billion.

That being said, even if this year falls short of what Wall Street is hoping for, Meritage Homes' stock price is almost too cheap to believe -- less than eight times earnings, according to data from S&P Global Market Intelligence -- despite long-term growth expectations in excess of 16%. It seems to me that such a cheap stock price gives plenty of reason to bid Meritage Homes stock up -- earnings miss or not.

Rich Smith has no position in any of the stocks mentioned. The Motley Fool recommends Meritage Homes. The Motley Fool has a disclosure policy.