The end of an earnings season can be a great time to discover new stocks and assess how companies are handling the current business environment. Let’s take a look at how Tri Pointe Homes (NYSE:TPH) and the rest of the home builders stocks fared in Q2.
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 Q2. As a group, revenues beat analysts‘ consensus estimates by 3%.
Inflation progressed towards the Fed’s 2% goal at the end of 2023, leading to strong stock market performance. On the other hand, 2024 has been a bumpier ride as the market switches between optimism and pessimism around rate cuts and inflation, and while some home builders stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 2.1% since the latest earnings results.
Weakest Q2: 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 $1.15 billion, up 37.9% year on year. This print exceeded analysts‘ expectations by 8.4%. Despite the top-line beat, it was still a mixed quarter for the company with a solid beat of analysts‘ earnings estimates but a miss of analysts‘ backlog sales estimates.
“I am pleased to report another quarter of outstanding results, driven by our focus on expanding scale and efficiencies within our existing markets while building a foundation for future growth in our new markets,” said Doug Bauer, Tri Pointe Homes Chief Executive Officer.
Tri Pointe Homes pulled off the fastest revenue growth of the whole group. Even though it had a great quarter relative to its peers, the market seems discontent with the results. The stock is down 16.5% since reporting and currently trades at $79.27.
Best Q2: 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 $1.71 billion, down 3.1% year on year, outperforming analysts‘ expectations by 3.4%. It was a stunning quarter for the company with an impressive beat of analysts‘ backlog sales estimates and a solid beat of analysts‘ earnings estimates.
The market seems happy with the results as the stock is up 16.5% since reporting. It currently trades at $79.27.
Skyline Champion (NYSE:SKY)
Founded in 1951, Skyline Champion (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.
Skyline Champion reported revenues of $627.8 million, up 35.1% year on year, exceeding analysts‘ expectations by 4.6%. It was a stunning quarter for the company with an impressive beat of analysts‘ earnings and volume estimates.
Interestingly, the stock is up 13% since the results and currently trades at $84.10.
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, up 11.7% year on year, surpassing analysts‘ expectations by 2.6%. More broadly, it was an strong quarter for the company with an impressive beat of analysts‘ backlog sales estimates.
The stock is flat since reporting and currently trades at $8,559.
D.R. Horton (NYSE:DHI)
One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE:DHI) builds a variety of new construction homes across multiple markets.
D.R. Horton reported revenues of $9.97 billion, up 2.5% year on year, surpassing analysts‘ expectations by 3.8%. Taking a step back, it was a mixed quarter for the company with a decent beat of analysts‘ earnings estimates but a miss of analysts‘ backlog sales estimates.
D.R. Horton delivered the highest full-year guidance raise among its peers. The stock is up 8.7% since reporting and currently trades at $171.26.
In conclusion, the Q2 earnings season for home builders stocks has been a mixed bag. While some companies like KB Home and Skyline Champion have seen positive stock performance post-earnings, others like Tri Pointe Homes have experienced declines. It will be interesting to see how these companies navigate the challenges and opportunities in the housing market moving forward. Investors should continue to monitor these stocks closely for potential investment opportunities.