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CCS MDC and most other home builders have sold off in the last couple weeks despite strong outlooks. CCS met analysts estimates for eps and beat on revs. They also reported a 35% increase in net new home orders yoy.
MDC has sold off bigly since reporting a miss (79c vs 87c est eps). But they also reported an amazing 58% increase in net new orders yoy. They raised prices in early September and orders still increased by 50% yoy. I smell some blow out quarters coming yet the stock has gone from overbought to oversold. It also pays a 3% dividend which is rare for the group.
I am adding more CCS and MDC here. TMHC looks very interesting too after dropping 8% today on news that they are buying out WLH. Their net new home orders were up 39% yoy last quarter. Earnings were in line.
NMM When I looked up this one,I expected to see the stock soaring on that big beat, but instead it is down 1%. I wonder why investors are selling the good news?
Being an MLP, I assume it issues a K-1 which creates hassles at tax time and could create problems in an IRA.
SAVE It started falling about when the CC began. Probably something that investors didn't like there,
Wade, I used ttm PEs for LGIH and MHO from TdAm.
MHO's earnings estimates will likely be going up after this big beat.
MHO has a market cap of $1.2 Billion. In my book anyway, that is larger than a small cap.
MHO Investors are more focused on that very large increase in new orders which were up 32% yoy and I think rightly so.
MHO remains relatively cheap compared to many others in the industry. Here's a comparison of MHO and LGIH on several metrics:
Stock PE P/S P/BV
MHO 10.3 .46 1.22
LGIH 14.5 1.2 2.6
As for not moving other home builders, MHO is not yet big enough to move the whole group.
I'll reserve final judgement until I see what they say in the CC.
PS: Wade,I agree with you that TWLO is grossly overpriced.
IVZ came out with a nice beat (70c vs 57c earnings est) and stock is having a nice pop 5% pop so far.
I bought this one mainly for the big yield of nearly 8%, so this is good gravy.
MHO I'm scratching my head as to how backlog was only up 2% while new orders were up 32% yoy to a new record. Apparently, they finished some houses ahead of schedule to close them last Q. Strong results and stock is up about 2% premarket.
From the PR:
Robert H. Schottenstein, Chief Executive Officer and President, commented, "Our third quarter results were very strong highlighted by record new contracts, homes delivered, revenue and pre-tax income. New contracts for the quarter increased 32%, homes delivered increased 16%, revenue improved by 15%, and net income increased by 29%. Gross margin improved to 20.5%, a 130-basis point improvement from the second quarter of 2019. In addition, we continue to improve our operating leverage as our overhead expense ratio for the quarter was 12.2%, 50 basis points better than last year's third quarter. The combination of our revenue growth and improved margins resulted in a 27% increase in pre-tax income to a third quarter record of $50.1 million."
Mr. Schottenstein continued, "Our financial condition remains strong. We ended the third quarter with record-high shareholders' equity of $955 million, an increase of 14% from 2018's third quarter, book value per share of $34, and a homebuilding debt to capital ratio of 44%. As we begin the final quarter of 2019, we are on track for another solid year of growth and improved financial performance."
PHM this homebuilder reported a beat in eps and revs and is up about 2% premarket.
EPS was $1.01 vs 92c estimate. Orders were up 13% yoy. Orders for first time buyers were up an amazing 39%. It looks like the millennials are aggressively buying homes with rates down.
Positive comments in the PR:
"Given a broadly favorable macroeconomic backdrop and expectations for interest rates to remain low, we see the opportunity for housing demand to continue moving higher over time," added Marshall. "Within this environment, our strong balance sheet and outstanding local market operations have the Company well positioned to grow our business while continuing to deliver high returns on equity and invested capital."
Ha Wade, just an hour ago you had said you bought CCS after the big runup today which I thought was odd.
Now it appears you deleted that buy CCS post because it is gone now.
I see why others complain about you changing your mind so frequently
and haphazardly.
I think the poll that R59 posted about, predictit.org ( I think) ,is one of the most reliable ones out there. The reason is that it is based on bets made with real money on possible outcomes. With hard earned money on the line, it tends to take the emotion out of it and accuracy improves.
25% market drop if Warren wins- that sure is a sobering thought and I don't disagree with Cooperman. He also predicts one last leg up before this 10.5 year bull market comes to an end. I can see the market beginning to drop in January as investors decide they better take profits before tax rates may go substantially higher the following year, assuming a Democratic win or as the likelihood of that happening increases. Even Biden is proposing an end to LTCG tax rates.
Btw, some like Warren, are also proposing a wealth tax. Wouldn't that require a change in our constitution?
I also like this quote from Winston Churchill:
“The main vice of capitalism is the unequal distribution of prosperity, the main vice of socialism is the equal distribution of misery.”
SAVE Improved revenue outlook for Q3 is the underlying reason for the big move today. Nice to finally hear some good news.
This investor update provides Spirit's third quarter 2019 guidance. All data is based on preliminary estimates.
For the third quarter 2019, Spirit estimates its total revenue per ASM (“TRASM”) will be down about 2% year over year. This is better than the Company estimated in early September 2019 primarily due to less-than-expected impact on forward bookings related to Hurricane Dorian and higher-than-expected passenger volume.
Adjusted CASM ex-fuel (“CASM ex-fuel”) for the third quarter 2019 is expected to be up about 8.5% year over year, better than the Company’s most recent guidance largely due to lower crew disruption and passenger re-accommodation expense as a result of better operational performance. Since early September, the Company achieved a better-than-expected controllable completion factor, despite higher weather-related cancellations.
25% of AMTD revs come from trade commissions. That's going to be a huge hole to plug. I wonder what they will do to cover it.
Most homebuilders have enjoyed a good move up already. I think LEN has further to go too (strongest stock in the SP500 today btw). I still like CCS and MHO too. NWHM is the cheapest on the numbers but I am leery of it as they have more exposure in CA. CA market is a weaker because it is a high cost state, SALT tax reform, and foreign buyers have really slowed down there.
I remain bullish on the group and it held up pretty well in the big market fall today.
LEN Lennar reported a nice earnings and rev beat beat and new orders are up too.
Homebuilder sector is moving from a weaker sector to a strong sector courtesy of the big drop in mortgage and interest rates.
Lennar (NYSE:LEN): Q3 GAAP EPS of $1.59 beats by $0.27.
Revenue of $5.86B (+3.4% Y/Y) beats by $380M.
Shares +1.1% PM.
zero comish is good for us but I sure am glad I don't own AMTD stock today.
Down 25%!
I have accounts with both TdAm and Merrill Edge. It is difficult to quantify but I would actually give the edge to ME when it comes to a better than limit price execution. Usually it is a small fraction of a penny, but it happens more often with ME than TD.
Lousy manufacturing index number at 10 AM sure punched the gut in our market rally this morning. Maybe we are finally going into a recession?
Merrill Edge has been offering 100 free trades/ month for larger clients for years. Lots of support too including quick answers to phone calls. What I can't figure out is how these guys still make a profit with zero commissions.
MU The only thing one can count on at earnings time is volatility. It appears that it was up 3.5% initially after the earnings report came out which showed a beat in eps and revs. Then sold off after hearing the CEO comments. Now down nearly 10%.
I am on the sidelines and plan to remain there for awhile. MU could well become a pawn if the trade war with China broadens. Bloomberg reported today that the administration is considering limiting Chinese access to our financial markets including perhaps a delisting of some China stocks. It may well be just a new bargaining chip but it could also turn into an escalation of the trade war. Too dicey for me now.
I'm afraid that our oil fracking stocks are basically dead money despite looking very cheap here; at least until after the election.
Conversely, solar stocks have been doing pretty well lately. I just opened a position in CSIQ which looks cheap after a big sell-off yesterday.
NRZ I think it was hurt by the big drop in interest rates. Investors were concerned that loans for the MSRs they hold would get refinanced and NRZ would be left with lower income and some writeoffs. Now that rates have recovered, that is less of a concern and the stock is recovering. I am holding.
MU I'm surprised it is holding up so well as Dram chip prices have given back half the gains they had back in July (as measured by DXI index).
Just watching this time around.
I agree that ROKU is a tempting short and they already have competition from Amazon and Google for Smart TV devices.
Housing starts announced this morning surged by 12.3% compared to a 4.5% estimate. This puts them at the highest level in 12 years and brings them more in line with the strong order book that many builders are reporting.
Housing had been the weak link in the economy but this takes that away. I still expect the Fed will drop rates by .25% due to a weakening global economy but the US economy is doing well.
Btw, 41% of investors now expect no rate cut, way up from 0% a month ago. Watch out below if that happens.
MDC, a homebuilder, reported a blow out number on new orders last night and is up about 3% premarket. Many home builders have been on fire lately with lower interest rates and the calming of concerns of a recession. I remain bullish on the sector.
M.D.C. Holdings (NYSE:MDC) reports net new home orders of 1,418 (+63% Y/Y) for first two months of the 2019 third quarter vs. 868 for the same period in 2018.
The increase was driven by a 40% improvement in the monthly sales absorption rate to 3.75 and a 17% increase in the average number of active subdivisions to 189.
The company believes it is well positioned for a strong close to the 2019 fiscal year due to the continued strength in order activity.
Interest rates hav turned north since China trade war concerns have diminished, or at least discussion about them. Recession fears have also tamped down too. Although a Fed rate cut has been priced in by the market, one could argue that it is no longer needed with the markets so close to record highs and the PPI index came in warmer than expected.
Dow down 600 and Nasdaq down nearly 3%. Rough way to start the week. Is anyone putting on their thick leather gloves and trying to grab some falling knives here?
I thought the market was desensitized to this trade war rhetoric but now there is a new twist with the Chinese allowing their currency to fall below 7 to $1 for the first time in over a decade. If that is what has rattled the street so much, it seems like an over-reaction to me.
I think much of the weakness in oil prices today is due to the very strong dollar. Interest rates are plunging too. At least it is good for the home builders who are mostly up.
Btw, the Green New Deal would totally destroy the entire fossil fuel industry, not just oil.
Value, best wishes to you on your treatments. I've had a couple of those basal cells and melanomas myself. I'm also pretty sure it stems from my young shirtless days at an outdoor job and at the beach.
I should have stayed indoors and studied stocks, lol.
I don't know about Powell's leadership qualities but he has a lot of patience. It seems like the journalists kept asking the same questions over and over using different words. He patiently answered them all.
Future Fed rate moves are data dependent as it should be.
Fec cuts rates as expected and the market tanks.
Is this a case of buy the rumor and sell the news or did Powell say something that I missed.
SAVE I did not know about that 40 lb weight limit on checked baggage. It sounds like people should do their DD before flying on that airline just like we do on our stocks before we buy them.
CCS Lots of strong results are coming out for the home builders. CCS also reported a beat with Earnings and revs beating by 4% and 8% respectively. They also reported strong order activity which is positive going forward.
DHI reported strong results yesterday and has had a nice move. MDC also reported a beat in earnings and revs and strong order activity too, yet it is down about 6% right now. Not sure why, but I am tempted to add some shares here.
SAVE yep, those big seats are a good deal. They are also up at the front of the plane so you get served first and get off the plane first too. No warm towels, free meals, or cocktails but I'm fine with that.
Another thing I found annoying is that they charged for carry on bags, unless they meet their size requirements. I bought a bag with rollers sized to meet that requirement (basically sized so it can fit under the seat but I still put it up above). For a short trip, that is good for me.
I also opened a position in this one at 41.82, so far so good. If AAL drops below 30 again, I will probably re-open a position in that one too. Frankly though, I've had overall better experiences on SAVE than AAL.
SAVE I also think this "walmart" of the airlines is oversold here. Has the newest fleet in the industry and no Boeing Max planes either. Don't own it but I'm interested here.
BYND Your post got me looking at this one which has surged over 800% since its recent IPO.
Current market cap: $13.5 Billion
Price/ sales ratio= 122/1
PE ratio NA as the company is losing money.
For 2020, analysts consensus estimate is for 5c eps:
2020 Fwd P/E= 4,400
Would anyone argue that this is not a very rich valuation for a company that makes plant based meat substitutes?
Still, I sure am glad that there were no shares available to short on this one as I would be losing my a** now.
My last comment on climate change here:
Value,
It is not at all clear to me that the poles are losing ice. Here are links to just a couple of articles that provide evidence that is simply not true. Spending trillions of dollars to fight something we don't need to will not help our stocks and economy either:
https://townhall.com/columnists/gregoryrummo/2019/07/23/apocalyptic-sea-level-risejust-a-thing-of-the-past-n2550424
https://principia-scientific.org/ice-growing-poles-global-warming-theories-implode/
Hi Value, Thanks for the link on that govt report on auto emissions and climate change. You are right, it is a long report.
This is not the board for a discussion on climate change but I do have a problem believing that we in the US can make any meaningful difference when we are only 4% of the world's population. We also lead the world in energy efficiency and technology. Another assumption in that report is that current trends will continue. Maybe they will and maybe they won't. Our planet has gone through cycles of massive warming and cooling throughout history, there is no reason to believe that will not continue, with or without man's influence.
I remember the big concern was global cooling in the 70s, then it changed to global warming and now it is the catchall "climate change". Climate changes, the unknown is how much of it is man-made.
value, I looked for that article about "climate change" in your link to the Trump hating Washington Post but did not see it.
Do you have a link to that 2018 report itself?
TRTN That was a beat (1.15 vs 1.12 est) and yet down she goes. Next to the oil stocks, the container stocks like TRTN and CAI are the most frustrating stocks I own.