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 Tri Pointe Homes (NYSE:TPH) 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 1.2%.
Amidst this news, share prices of the companies have had a rough stretch. On average, they are down 11.6% since the latest earnings results.
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 print exceeded analysts’ expectations by 3.3%. Despite the top-line beat, it was still a mixed quarter for the company with an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ backlog estimates.
“Tri Pointe Homes delivered strong fourth quarter results, capping off another exceptional year for our company,” said Tri Pointe Homes Chief Executive Officer Doug Bauer.
The stock is down 15.5% since reporting and currently trades at $30.61.
Is now the time to buy Tri Pointe Homes? Access our full analysis of the earnings results here, it’s free.
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 an impressive beat of analysts’ sales volume estimates and a solid beat of analysts’ EPS estimates.
The stock is down 6.3% since reporting. It currently trades at $86.94.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free.
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 21.5% since the results and currently trades at $95.74.
Read our full analysis of Toll Brothers’s results here.
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 $7.63 billion, up 4.4% year on year. This print topped analysts’ expectations by 2%. Zooming out, it was a mixed quarter as it also logged an impressive beat of analysts’ EPS estimates but a miss of analysts’ backlog estimates.
The stock is down 9.6% since reporting and currently trades at $108.47.
Read our full, actionable report on Lennar here, it’s free.
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 $1.39 billion, down 5.2% year on year. This result came in 6.5% below analysts' expectations. It was a disappointing quarter as it also recorded full-year revenue guidance missing analysts’ expectations and a significant miss of analysts’ adjusted operating income estimates.
The stock is down 10.3% since reporting and currently trades at $55.43.
Read our full, actionable report on KB Home here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
Want to invest in winners with rock-solid fundamentals? Check out our Top 6 Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.
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