PHM

Don’t Be Tempted By Homebuilders’ Dividends

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Image Source: Toll Brothers By Kris Rosemann The underproduction of homes since 2008 has created pent-up demand, providing a material tailwind for homebuilders as of late. According to estimates from Toll Brothers (TOL), the total estimated shortfall of housing starts from the period 2008-2014 was 5.7 million. That equates to an annual shortfall in production of ~818,000 new homes, providing significant opportunities for the homebuilding group as a whole moving forward. Pent-up housing demand has been accruing for years, and stronger general economic conditions, including lower unemployment, modest wage growth, and general consumer confidence continue to drive demand. A favorable jobs/wage market has the potential to provide a material boost for homebuilders, and additional demand could be found in the … Read more

Dividend Increases/Decreases for the Week Ending December 4

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Below we provide a list of firms that raised/lowered their dividends during the week ending December 4. The dividend reports of covered firms on this list will be updated shortly with the new information. To access our dividend reports use the ‘Symbol’ search box in our website header. Firms Raising Their Dividends This Week Bank of Montreal (BMO): now C$0.84 per share quarterly dividend, was C$0.82. C.H. Robinson Worldwide (CHRW): now $0.43 per share quarterly dividend, was $0.38. Canadian Imperial Bank of Commerce (CM): now C$1.15 per share quarterly dividend, was C$0.84. Canadian Western Bank (CBWBF): now $0.23 per share quarterly dividend, was $0.22. Citizens Holding (CIZN): now $0.24 per share quarterly dividend, was $0.23. CoreSite Reality (COR): now $0.53 … Read more

What’s The Deal with US Housing?

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Pictured: An unfinished sub-division in rural Illinois, May 2015. Springtime is here, and housing construction is booming. The US Census Bureau’s latest tally for the seasonally-adjusted annualized rate of housing starts in April came in at 1.14 million, up an incredible 20% from the revised March estimate of 944k (sequentially) and up 9% from the April 2014 rate (year-over-year). That’s some nice expansion, to say the least. Our long-held indirect plays on the US housing recovery have been a couple of ETFs, which focus on an improving consumer credit environment and incremental loan growth from the depths of the Financial Crisis. The two ETFs can be found in the Best Ideas Newsletter portfolio, and we continue to believe that they … Read more

Homebuilders Bucking Downtrend

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Homebuilders have a reason to be optimistic as of late. Not only has the SPDR S&P Homebuilders ETF (XHB) firmed up, but Toll Brothers (TOL) released strong fundamental news, helping to buoy the industry. Toll Brothers operates at the high-end of the homebuilding industry. Its average home price, for example, has historically been ~$650,000 compared to ~$300,000 for its publicly-traded peers. As a result, we’d view Toll’s main competitors as small private builders catering to luxury demographics, not necessarily the large public builders. The firm’s performance, however, is worth watching as yet another data point with respect to the industry’s health. Pent up housing demand has been accruing for years, and new home inventory is limited, which makes for an … Read more

Valuentum Economic Castleâ„¢ Rating Update

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Read: Keeping the Horse Before the Cart: Valuentum’s Economic Castle™ Rating The Economic Castle Focuses on the Magnitude of Economic Value Creation The Valuentum Economic Castle™ rating is an enhancement of the competitive advantage framework (commonly known as economic moat analysis) that has become widespread and ubiquitous within the investing world. Whereas an economic moat framework evaluates a firm on the basis of the sustainability and durability of its competitive advantages, Valuentum’s Economic Castle™ rating evaluates a firm on the basis of the firm’s future economic profit spread (return on invested capital less its weighted average cost of capital). The companies with the strongest Valuentum Economic Castle™ ratings are poised to generate the most economic value for shareholders in the … Read more

Housing Remains Resilient; D.R. Horton Says Has “Pricing Power”

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On Tuesday, the US’ largest homebuilder, as measured by number of homes closed, revenue and pre-tax income, reported solid fiscal 2014 first-quarter results, lifting spirits across much of the industry. D.R. Horton’s (DHI) homebuilding revenue leapt 33% thanks primarily to a 19% increase in homes closed in the quarter and an average sales price increase of 10%, to $275,600. Home sales gross margin advanced 350 basis points, to 22.3%, helping drive a 76% increase in pre-tax income for the period. The company’s diluted earnings per share increased 80%, to $0.36. The pace of orders was also robust, jumping 14% in value to $1.5 billion and 4% in homes to 5,454. D.R. Horton’s sales order backlog also swelled 20% in value to … Read more

Toll Brothers Sees Leveling of Demand But Outlook Remains Strong

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On Tuesday, one of the largest luxury homebuilders in the US, Toll Brothers (TOL) released its results for the fiscal fourth quarter (ended October 31, 2013). Revenue growth and unit delivery expansion were fantastic, up 65% in dollars and 36% in units compared to the prior-year quarter. Net signed contracts of $839 million and 1,163 units rose 23% in dollars and 6% in units compared to last year’s period, while on a per-community basis, the fourth quarter witnessed net signed contracts per community (5.17) that was the highest for any fourth quarter since 2005. Backlog of $2.63 billion and 3,679 units rose 57% in dollars and 43% in units compared to the year-ago mark. The average price of homes delivered … Read more