Wrapping up Q3 earnings, we look at the numbers and key takeaways for the home builders stocks, 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 11 home builders stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.
In light of this news, share prices of the companies have held steady. On average, they are relatively unchanged 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 $854.7 million, down 25.3% year on year. This print exceeded analysts’ expectations by 15%. Overall, it was a strong quarter for the company with an impressive beat of analysts’ adjusted operating income estimates and a solid beat of analysts’ revenue estimates.
“Tri Pointe once again exceeded the high end of our delivery range, closing 1,217 homes at an average sales price of $672,000, and generating $817.3 million in home sales revenue for the third quarter,” said Doug Bauer, Tri Pointe Homes Chief Executive Officer.
Tri Pointe Homes pulled off the biggest analyst estimates beat of the whole group. Investor expectations, however, were likely higher than Wall Street’s published projections, leaving some wishing for even better results (analysts’ consensus estimates are those published by big banks and advisory firms, not the investors who make buy and sell decisions). The stock is down 3.1% since reporting and currently trades at $31.85.
Is now the time to buy Tri Pointe Homes? 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 an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.
Champion Homes scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 21.6% since reporting. It currently trades at $80.97.
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 7.9% since the results and currently trades at $65.43.
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 print topped analysts’ expectations by 4%. It was a stunning quarter as it also recorded a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is up 5.7% since reporting and currently trades at $251.92.
LGI Homes (NASDAQ: LGIH)
Based in Texas, LGI Homes (NASDAQ: LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
LGI Homes reported revenues of $396.6 million, down 39.2% year on year. This number surpassed analysts’ expectations by 1.6%. Zooming out, it was a softer quarter as it logged a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
LGI Homes had the slowest revenue growth among its peers. The stock is up 13.3% since reporting and currently trades at $46.17.
Read our full, actionable report on LGI Homes here, it’s free for active Edge members.
Market Update
Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September 2024, a quarter in November) have propped up markets, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there’s still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.
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