Let’s dig into the relative performance of Installed Building Products (NYSE:IBP) and its peers as we unravel the now-completed Q2 home builders earnings season.
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 decent Q2. As a group, revenues beat analysts’ consensus estimates by 2.8%.
Stocks, especially growth stocks with cash flows further into the future, had a good end of 2023. On the other hand, this year has seen more volatile stock market swings due to mixed inflation data. However, home builders stocks have held steady amidst all this with share prices up 4.6% on average since the latest earnings results.
Installed Building Products (NYSE:IBP) Founded in 1977, Installed Building Products (NYSE:IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Installed Building Products reported revenues of $737.6 million, up 6.6% year on year. This print was in line with analysts’ expectations, but overall, it was a slower quarter for the company with a miss of analysts’ organic revenue and earnings estimates.
“IBP reported another strong quarter of growth and profitability highlighting the value our talented and committed teams provide to our residential and commercial customers. Growth across our core end markets remained positive during the second quarter as builders continued to meet new construction home demand, helping IBP achieve another quarter of record sales and earnings,” stated Jeff Edwards, Chairman and Chief Executive Officer.
Unsurprisingly, the stock is down 18.6% since reporting and currently trades at $220.39.
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Best Q2: Skyline Champion (NYSE:SKY) Founded in 1951, Skyline Champion (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.
Skyline Champion reported revenues of $627.8 million, up 35.1% year on year, outperforming analysts’ expectations by 4.6%. It was an incredible quarter for the company with an impressive beat of analysts’ earnings estimates.
The market seems happy with the results as the stock is up 20.7% since reporting. It currently trades at $89.86.
Weakest Q2: TopBuild (NYSE:BLD) Established in 2015 following a spinoff from Masco Corporation (NYSE:MAS), TopBuild (NYSE:BLD) is a distributor and installer of insulation and other building products.
TopBuild reported revenues of $1.37 billion, up 3.7% year on year, falling short of analysts’ expectations by 2.3%. It was a weak quarter for the company with a miss of analysts’ earnings estimates.
As expected, the stock is down 8.2% since the results and currently trades at $390.53.
KB Home (NYSE:KBH) The first homebuilder to be listed on the NYSE, KB Home (NYSE:KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
KB Home reported revenues of $1.71 billion, down 3.1% year on year, surpassing analysts’ expectations by 3.4%. Zooming out, it was a stunning quarter for the company with an impressive beat of analysts’ backlog sales estimates.
The stock is up 22% since reporting and currently trades at $83.02.
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 $1.70 billion, up 8.2% year on year, surpassing analysts’ expectations by 9.1%. More broadly, it was a mixed quarter for the company with an impressive beat of analysts’ operating margin estimates but full-year revenue guidance missing analysts’ expectations.
Meritage Homes delivered the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is up 1.3% since reporting and currently trades at $194.15.
This content was originally published on Stock Story
