As the Q2 earnings season comes to a close, it’s time to take stock of this quarter's best and worst performers in the home builders industry, including Meritage Homes (NYSE:MTH) and its peers.
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 11 home builders stocks we track reported an ok Q2; on average, revenues beat analyst consensus estimates by 3%. Stocks--especially those trading at higher multiples--had a strong end of 2023, but 2024 has seen periods of volatility. Mixed signals about inflation have led to uncertainty around rate cuts, and while some of the home builders stocks have fared somewhat better than others, they collectively declined, with share prices falling 1.9% on average since the previous earnings results.
Weakest Q2: 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, exceeding analysts' expectations by 9.1%. Despite the top-line beat, it was a slower quarter overall for the company with full-year revenue guidance missing analysts' expectations and a miss of analysts' backlog sales estimates.
“Meritage’s strong second quarter 2024 performance reflected the progress we are making on delivering quick turning move-in ready homes, resulting in $1.7 billion of home closing revenue and our highest second quarter closings," said Steven J. Hilton, executive chairman of Meritage Homes.
Meritage Homes achieved the biggest analyst estimates beat but had the weakest full-year guidance update of the whole group. The stock is down 6.8% since reporting and currently trades at $178.57.
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Best Q2: 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, outperforming analysts' expectations by 3.4%. It was a stunning quarter for the company with an impressive beat of analysts' backlog sales estimates and a solid beat of analysts' earnings estimates.
The market seems happy with the results as the stock is up 17.5% since reporting. It currently trades at $79.99.
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, exceeding analysts' expectations by 4.6%. It was still a stunning quarter for the company with an impressive beat of analysts' earnings estimates.
Interestingly, the stock is up 10.7% since the results and currently trades at $82.37.
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, in line with analysts' expectations. Taking a step back, it was a weak quarter for the company with a miss of analysts' organic revenue and earnings estimates.
The stock is down 20.7% since reporting and currently trades at $214.76.
NVR (NYSE:NVR) Known for its unique land acquisition strategy, NVR (NYSE:NVR) is a respected homebuilder and mortgage company in the United States.
NVR reported revenues of $2.61 billion, up 11.7% year on year, surpassing analysts' expectations by 2.6%. More broadly, it was a strong quarter for the company with an impressive beat of analysts' backlog sales estimates.
The stock is down 2.4% since reporting and currently trades at $8,425.
This content was originally published on Stock Story
