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bbotcs, The huge premium over market price being paid to take NWHM private along with more strong earnings reports and guidance next week could well be the spark needed to get the home builders moving back up again. I think virtually all of them are undervalued now.
DHI I don't own that one myself, I posted about it because they are one of the first to report and also one of the largest so that gives an insight to the other reports coming in the week ahead. TPH, a smaller home builder, also reported and also beat on the top and bottom lines. It is up 2% today.
I also own LEN, PHM, and TMHC along with some others in the group. Bring on those earnings, I expect them to be strong.
DHI This huge homebuilder beat on the top and bottom lines.
D. R. Horton (NYSE:DHI): FQ3 GAAP EPS of $3.06 beats by $0.26.
Revenue of $7.3B (+35.4% Y/Y) beats by $130M.
Homes closed increased 22% to 21,588 homes and 35% in value to $7.0 billion.
Net sales orders decreased 17% to 17,952 homes and 2% in value to $6.4 billion.
Sales order backlog of homes under contract at June 30, 2021 increased 39% to 32,209 homes and 57% in value to $11.0 billion compared to 23,205 homes and $7.0 billion at June 30, 2020.
Despite the good news, traders are sending the stock lower in pre-market by about 4%. I presume they are focusing on the slight drop in new orders last quarter. However, DHI has intentionally slowed down orders because they cannot keep up with demand in virtually all of their markets. They explained this in their PR. I expect they will provide more details in their CC this morning. Good times continue to roll for the homebuilders:
“Housing market conditions remain very robust, with homebuyer demand exceeding our current capacity to deliver homes across all of our markets. As our top priority is to consistently fulfill our commitments to our homebuyers, we have slowed our home sales pace to more closely align to our current production levels, while building out the infrastructure needed to support a higher level of home starts. We are also selling homes later in the construction cycle when we can better ensure the certainty of the home close date for our homebuyers. After starting 22,600 homes during the quarter, our homes in inventory at June 30, 2021 increased 44% from a year ago to 47,300 homes, positioning us to finish fiscal 2021 strong and produce double-digit volume growth in fiscal 2022.
SGMA Went to cash in on some of those $7 shares but when I went to my brokerage account, they were already below 6. That party sure didn't last long!
TMHC I like that one too and opened a position in it about 2 weeks ago, (two weeks early it appears). A slew of home builder earnings reports come out between 7/22 and 7/29. I expect those will get this group moving in the right direction again...
LPX I'm surprised at the huge drop in lumber prices on the futures market. Front month futures peaked at $1700 aseveral weeks ago, now they are under $800. Still high historically but nowhere near record territory anymore. Retail lumber prices probably have not dropped nearly as much yet as dealers try to work off their expensive inventory first.
LPX does OSB sheeting and siding, not lumber, but they usually track lumber so that is probably why it has sold off recently. I did sell my RFP recently (lumber mills and pulp and paper). Lower lumber prices should benefit the home builders, although they have been rather weak lately. Waiting for Q2 reports with them.I expect some very strong reports there.
LEN +2.50 having a good day after reporting a beat in earnings and revs and a strong outlook. Surprised there doesn;t seem to be any carry over into other home builders, at least so far.
The CEO commented "The housing market has proven to be robust in the current environment and we expect it to continue to be a significant driver in the recovery of the overall economy. As we look ahead to our third quarter, we expect to deliver between 15,800 – 16,100 homes while we expect homebuilding gross margins to continue to exceed prior guidance and be between 27.0% - 27.5%. With an excellent balance sheet and continued execution of our core operating strategies, we are extremely well positioned for a very strong 2021."
Home builders, particularly CCS have sold off as at least one analyst, Zelman, noted that new orders are down. He is right about that but wrong about the reason. Orders are down, not because of lower demand, but because most builders have taken to limiting sales. They are drowning in demand and cannot keep up. So, they will release only a limited number of lots per week in each community. With that they are taking sealed bids from interested buyers. The highest bidders get their houses. Many are also looking to rebuild their spec inventory, not making those available until they are framed up and they have a better handle on costs.
As for costs, lumber prices have been in retreat lately. Lumber futures have dropped from $1700/mbf a month or so ago to just under $1000 today.
LEN, a giant in the industry, releases earnings tomorrow. I expect a good beat and a healthy bullish outlook from them. If so, this could well get the builders back in rally mode.
CCS has been hit harder than the others the last two days but I don't see any news to account for that.
Lumber prices have dropped back a bit as mills finally increase production, interest rates remain very low, and several builders have switched to a sealed bidding process for home buyers as demand outstrips what they can even keep up with.
LEN, the biggest in the industry, comes out with earnings on Monday. I am looking for a strong beat which should get the group moving in the right direction again.
BGFV The stock basically doubled in the last month so I'm not surprised to see the recent sell-off here. I figure they will earn about $4 this year which gives them a PE of 7.5 The company is debt free and has substantial cash to boot.
Another SA article came out about it last week with an interesting title. The author discussed several pros and cons. When he did a financial analysis based on discounted free cash flows, he came up with an estimated value of $56. I'd be surprised to see that but I think $40+ can be justified.
https://seekingalpha.com/article/4432612-big-5-sporting-goods-every-dog-gets-lucky-once
Wade. BGFV could have been your biggest winner of all time if you hadn't kept changing your mind about it on almost a daily basis. I think you were the first to sell it after it announced those blow out earnings almost a year ago. You apparently thought it was a one time event:
https://investorshub.advfn.com/boards/read_msg.aspx?message_id=156800907&txt2find=bgfv
Mermelstein, Clinton got retroactive tax increases passed during his first term in office so it has been done before.
bbotc OT, I'm not at all surprised that Biden wants that big Cap gains tax increase retroactive to last April. That may actually be a good thing as it may prevent a giant wave of selling to beat it near year end. At any rate, I don't think it kicks in until above $400,000, although I'm not sure whether that amount refers to total income or only cap gains. I also hope the few moderate Democrats in the Senate will limit or even stop those big tax increases, both corporate and personal.
BGFV bbotcs, not saying I bought at the 52 week low. Most of us started buying in the 2s after that first great earnings report last Summer. You could well be right about the stock hitting the 40s but we are getting close which is why I lightened up. Also, I am holding until July in my regular taxable accounts to turn it into LT cap gains.
BGFV Sold some shares on this latest rally. Amazing that its 52 week low is only $1.69
BGFV Are those the same analysts whose predictions on Q1 and Q2 earnings were way too low?
"Big 5 Sporting Goods Sees Q2 EPS $1.05-$1.15 Vs. $0.38 Est., Expects Sames Store Sales To Increase 22%-27%"
NMM keeps dropping, now down in the 25s. News of the $110 mil shelf filing has now cost stockholders twice that much in market cap. Stockholders are sure pissed at the CEO for doing that but it makes sense to me if they find a bargain and add more ships.
NMM down 8% on news they the company filed for an offering of stock for up to $110M. It seems like an over-reaction as this looks like a shelf filing. If they did the full amount it would increase shares outstanding by about 15%.
I happen to be in Vegas right now but we are just driving back up from our winter home in Arizona. Drove down the strip about 6 PM yesterday. There were plenty of people but nothing like it was pre-covid days. Most places still have signs requiring masks but don't say anything to those without them. We stayed at the Virgin Hotel, which is the completely remodeled Hard Rock Hotel. I didn't think it was very busy at all. Max of 3 players at 21 tables. Heard comments about how difficult to find staff to work there.
I don't think the good old days are quite back in Vegas, not yet anyway.
TDS remains alive and well, lol.
AVNW continues its comeback, now at $31.59. Someone asked them in the CC why they did not update their guidance. They said it is project based so they didn't feel it was needed, but that it is conservative. Also didn't feel the chip shortage would have a material effect.
WFSTF Looks like the market likes that 14c eps in Q1 as stock is up today.
I was pleased especially considering their lumber mills are in Western Canada so they no doubt experience winter related slow downs. Also while lumber prices averaged about $900 mbf in Q1 they are now much higher, today they hit $1600.
AVNW Big beat on earnings and a beat on revs too. 49c eps non-GAAP but $8 eps GAAP due to a big tax rate adjustment. I would of thought this would be up not down bigly on that news.
I'll have my buy trigger ready if this continues tomorrow.
I've seen reports that the stumpage rates (what the loggers get) have not risen nearly as much as lumber has. So, the lumber mills should be making a killing now, RFP and WFSTF are two I have some stock in. Eliminating tariffs should have been done months ago. As I recall, tariffs were reduced last November but still about 10% on lumber imported from Canada.
Good luck with your new home project!
AVNW Is that restructuring charge the reason for the sharp drop in earnings estimates from 73c to 28c? If so, I wonder why Q4 estimates have also dropped by a similar amount? It is never clear to me whether earnings estimates are GAAP or non-GAAP. Some seem to do it one way, others don't.
Lumber prices keep moving upward and breaking records. May futures are now at $1600/mbf and July futures are at about $1500. Doesn't seem to bother the home builders as they can't keep up with demand even as they raise prices on a regular basis, even daily. Sure glad I am not building a home now.
Rninsiders, I have traded shares in and out of BGFV. What I generally do in taxable accounts in situations like BGFV is pick the lots I am selling by choosing those that I had acquired most recently rather than the default FIFO. This gives me a higher likelihood of seeing my original positions go to LTCG with lower tax rates. Hopefully that rule won't be changed.
Gerson is a writer for the Washington Post. A requirement for that is that he drinks the liberal kool-aid and vents against conservatives.
Ha, maybe he is asking for a pay raise now.
BGFV Woohoo.. Still have a nice bundle of it. I wanted to wait and turn my early buys from last July into LTCG.
Thanks to MichaelT, Hweb, and others who pointed out those monster earnings back then.
BELFB That huge friday rally on Friday was a big gift. I was concerned that maybe good news had leaked out. Obviously not!
BELFB Boom, now it's up 18% ahead of earnings on Monday on no news that I can see. Nice buy hweb..
Biden administration saying they want to back date proposed tax increases to cover this year. That could well be making the market nervous.
Ford announced a 50% production cut next quarter from what they planned and also a 10% production cut in H2 due to a huge chip shortage. New cars all need chips now. I wonder if the semis might be good buys here despite their run ups. There are the majors like MU and NVDA. Any others people here like?
https://seekingalpha.com/news/3687349-ford-expects-to-lose-half-of-planned-q2-production-from-chip-shortage
MTH Last quarter they downplayed their expectations for the just reported quarter. Looks like they were sandbagging. NWHM sounded the same and they report tomorrow morning. NWHM is the cheapest of the group and is up 5% today as some investors are wondering if they also sandbagged.
CCS This homebuilder just reported another huge beat with $3 eps vs $1.65 analyst est. Should be a strong day tomorrow:
Wed, April 28, 2021, 1:05 PM
CCS
+0.47%
- Net Income Increased 289% to a Company Record $101.7 Million or $3.00 Per Diluted Share -
- Total Revenues Increased 67% to a Company Record $1.0 Billion -
- Home Deliveries Increased 50% to a First Quarter Record 2,797 Homes -
- Record Net New Home Contracts Increased 45% to 3,455 Homes -
- Increased 2021 Outlook for Revenue and Deliveries -
MHO Those were seem real blow out numbers. CCS reports after the close today and MDC announces tomorrow morning. Hopefully they will put out similar results.
FCBP Stock of the day: up about 30% on strong earnings and merger news.
Thank-you skillz as I think you were first to tout it here.
I recall that most everyone said Biden is a moderate so don't worry about big tax increases if he wins. He sure doesn't act and talk like any moderate I remember. The left is controlling the Democratic party now, not the moderates.
WFSTF does look cheap to me too despite tis recent run-up and I picked up some. I also would not be at all surprised if the US drops its import tax on lumber which would benefit WFSTF and RFP.
RFP and lumber: Lumber futures continue to ratchet higher into new record territory on almost a daily basis. May futures are now over $1300. Builders would really be hurting except that they have virtually free rein in raising prices with record demand that they can't even keep up with. RFP, a timber mill and pulp company, has tripled in the last 6 months. I'm still holding over half of my shares. Inflation has definitely hit the housing industry.