Let’s dig into the relative performance of NVR (NYSE:NVR) and its peers as we unravel the now-completed Q3 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 mixed Q3. As a group, revenues beat analysts’ consensus estimates by 2.9% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady as they are up 1.7% on average since the latest earnings results.
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, down 4.5% year on year. This print exceeded analysts’ expectations by 1.4%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ EBITDA estimates.
Unsurprisingly, the stock is down 6.9% since reporting and currently trades at $7,260.
Is now the time to buy NVR? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: 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 $684.4 million, up 11% year on year, outperforming analysts’ expectations by 6.9%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
Champion Homes delivered the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 26.9% since reporting. It currently trades at $84.43.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: 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 $1.42 billion, down 10.8% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue estimates and a significant miss of analysts’ adjusted operating income estimates.
Meritage Homes delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 1.8% since the results and currently trades at $69.75.
Read our full analysis of Meritage Homes’s results here.
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 $778.2 million, up 2.3% year on year. This result topped analysts’ expectations by 4%. Overall, it was a stunning quarter as it also logged an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is up 11.8% since reporting and currently trades at $266.05.
Taylor Morrison Home (NYSE:TMHC)
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $2.10 billion, down 1.2% year on year. This number beat analysts’ expectations by 3.4%. It was a strong quarter as it also produced an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is down 2.8% since reporting and currently trades at $60.82.
Read our full, actionable report on Taylor Morrison Home here, it’s free for active Edge members.
Market Update
The Fed’s interest rate hikes throughout 2022 and 2023 have successfully cooled post-pandemic inflation, bringing it closer to the 2% target. Inflationary pressures have eased without tipping the economy into a recession, suggesting a soft landing. This stability, paired with recent rate cuts (0.5% in September 2024 and 0.25% in November 2024), fueled a strong year for the stock market in 2024. The markets surged further after Donald Trump’s presidential victory in November, with major indices reaching record highs in the days following the election. Still, questions remain about the direction of economic policy, as potential tariffs and corporate tax changes add uncertainty for 2025.
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