As the Q4 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 Lennar (NYSE:LEN) 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 12 home builders stocks we track reported a slower Q4. As a group, revenues beat analysts’ consensus estimates by 1.4%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 8.6% since the latest earnings results.
Lennar (NYSE:LEN)
One of the largest homebuilders in America, Lennar (NYSE:LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.Lennar reported revenues of $9.95 billion, down 9.3% year on year. This print fell short of analysts’ expectations by 1.9%. Overall, it was a disappointing quarter for the company with a significant miss of analysts’ adjusted operating income estimates.
Stuart Miller, Executive Chairman and Co-Chief Executive Officer of Lennar, said, "In the course of our fourth quarter, the housing market that appeared to be improving as the Fed cut short-term interest rates, proved to be far more challenging as mortgage rates rose almost 100 basis points through the quarter. Even while demand remained strong, and the chronic supply shortage continued to drive the market, our results were driven by affordability limitations from higher interest rates."
Lennar delivered the slowest revenue growth of the whole group. The stock is down 16.4% since reporting and currently trades at $118.
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Best Q4: Champion Homes (NYSE:SKY)
Founded in 1951, Champion Homes (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.Champion Homes reported revenues of $644.9 million, up 15.3% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with a solid beat of analysts’ sales volume estimates and an impressive beat of analysts’ EPS estimates.
The market seems happy with the results as the stock is up 13.1% since reporting. It currently trades at $104.99.
Weakest Q4: Toll Brothers (NYSE:TOL)
Started by two brothers who started by building and selling just one home in Pennsylvania, today Toll Brothers (NYSE:TOL) is a luxury homebuilder across the United States.Toll Brothers reported revenues of $1.86 billion, down 4.6% year on year, falling short of analysts’ expectations by 2.9%. It was a disappointing quarter as it posted a significant miss of analysts’ EBITDA and EPS estimates.
As expected, the stock is down 10.8% since the results and currently trades at $108.80.
Tri Pointe Homes (NYSE:TPH)
Established in 2009 in California, Tri Pointe Homes (NYSE:TPH) is a United States homebuilder recognized for its innovative and sustainable approach to creating premium, life-enhancing homes.Tri Pointe Homes reported revenues of $1.25 billion, flat year on year. This number beat analysts’ expectations by 3.3%. Zooming out, it was a mixed quarter as it also produced a solid beat of analysts’ EBITDA estimates but a significant miss of analysts’ backlog estimates.
The stock is down 14.5% since reporting and currently trades at $30.96.
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 $2.85 billion, up 17% year on year. This print topped analysts’ expectations by 2.3%. Aside from that, it was a satisfactory quarter as it also recorded a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.
The stock is down 14.2% since reporting and currently trades at $7,200.
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