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Sep. 17, 2015, 3:49 PM
- Outperforming alongside the big dividend payers are the homebuilders after the FOMC refrained from hiking rates today, but still all but promises tighter policy before the year is out. The big gains in homebuilders are in contrast to the S&P 500 which is flat.
- The inaction has sparked a major rally in bonds across the curve, with the 10-year yield lower by ten basis points to 2.20% and the two-year yield down a full twelve basis points to 0.68%.
- Earlier today, August housing starts disappointed, and July starts were revised sharply lower.
- Previously: August housing starts disappoint; July revised sharply lower (Sept. 17)
- Toll Brothers (TOL +1.2%), Lennar (LEN +1.5%), Hovnanian (HOV +6%), PulteGroup (PHM +1.1%), Ryland (RYL +2.1%), D.R. Horton (DHI +2%), KB Home (KBH +2%)
- ETFs: ITB, XHB
Sep. 15, 2015, 1:28 PM
- Despite worries about a wash of apartment construction over the past five years, a high occupancy rate has builders Lennar (NYSE:LEN) and Toll Brothers (NYSE:TOL) doubling down in the market.
- Toll plans to literally double its apartment-development division and expand its from the northeast corridor across the country. In Lennar's case, it's built a $1.1B war chest for construction in 25 markets and wants to expand it to $2B within a year.
- The long-term annual average in apartment building is 120,000/year; meanwhile, developers in 79 markets built 173K units last year, and are expected to build 220K this year and 190K next year.
- Vacancy rates, though, have been at 15-year lows (about 4.2%) while rents have steadily risen to 15-year highs ($1,194/month in 79 markets). And the percentage of people "doubled up" (living with a non-spouse adult) rose to 48% this year from 44% in 2007, suggesting many will seek their own rental.
- Lennar and Toll reps say they're being conservative, and the market isn't peaking yet.
Sep. 11, 2015, 8:04 AM
- As a group, the three are higher on the year, but are considerably lower since April 1, with Meritage Homes (NYSE:MTH) off 22%, Toll Brothers (NYSE:TOL) 6%, and PulteGroup (NYSE:PHM) 7.8%.
- All three are upgraded to Neutral from Underweight.
- Alongside these moves, JPMorgan also downgraded two other homebuilders.
Aug. 25, 2015, 8:37 AM
- Toll Brothers (NYSE:TOL) is 2.4% lower premarket after posting a miss on its FQ3 revenues and profits.
- Net income slipped nearly 32%, to $66.7M. While revenues fell 3%, net signed contracts were up 30% in dollar terms, to $1.23B, and up 12% in terms of units, to 1,479.
- Backlog of $3.69B (up 19%) and 4,447 units (up 6%), the highest backlog for any quarter's end in eight years. Average price of homes in backlog was $829K, over $800K for the first time.
- Gross margin of 19.8% was down from a year-ago 22.7%.
- The company guided to fiscal Q4 deliveries of 1,645-1,945 at average price of $780K-$800K, which narrows its guidance on full-year deliveries to 5,350-5,650 homes at average price of $745K-$760K.
- The company will discuss the results and its full-year outlook on a conference call to come at 11 a.m. ET.
Aug. 25, 2015, 5:13 AM
- Toll Brothers (NYSE:TOL): FQ3 EPS of $0.36 misses by $0.13.
- Revenue of $1.03B (-2.8% Y/Y) misses by $20M.
Aug. 24, 2015, 5:30 PM
Aug. 17, 2015, 4:33 PM
- Major stock indexes rebounded from opening declines to finish modestly higher, after a solid housing report showed some strength on a lightly traded Monday.
- Homebuilding stocks paced gainers, including Toll Brothers (TOL +2.3%); Ryland (RYL +2.1%); KB Home (KBH +3.1%), Lennar (LEN +2.7%) and Taylor Morrison Home (TMHC +2.9%).
- The S&P 500 gained 0.5% to 2,102.44; for 2015, it's up 2.12%. The move up came despite a grim reading from New York manufacturing that sent bond yields lower. TLT +0.5%; TBT -0.8%.
- Volumes overall were about 20% below recent average.
- Sector gains were broadly distributed, with a flat energy sector as the laggard. Healthcare stocks performed well, paced by dollar volume leaders Gilead Sciences (GILD +0.7%), Johnson & Johnson (JNJ +1.1%) and Biogen (NASDAQ:BIIB) +1.1%.
Jul. 22, 2015, 10:36 AM
- In the latest data point signaling the housing recovery has shifted into another gear, the NAR earlier reported a 3.2% gain in the seasonally adjusted annualized rate of existing home sales to 5.49M in June.
- Sales are at their highest pace since February 2007 and are 9.6% above the pace of one year ago.
- The median price of $236.4K is up 6.5% Y/Y and surpasses the peak set in July 2006.
- ETFs: ITB +1.5%, XHB +1.5%
- Toll Brothers (TOL +2%), Lennar (LEN +1.7%), KB Home (KBH +1.9%), Pulte (PHM +2.1%), D.R. Horton (DHI +2.1%), Hovnanian (HOV +0.9%), Ryland (RYL +3.1%)
- Previously: Existing home sales rise to fastest pace in eight years (July 22)
Jul. 17, 2015, 9:57 AM
- A combination of sluggish job growth and abundant supply has made Washington, D.C. one of the worst U.S. markets for landlords, but rebounding employment is leading to renewed development.
- Toll Brothers (NYSE:TOL) plans to more than double its stock of apartments over the new three years, Camden Property Trust (NYSE:CPT) has 862 units under construction, and AvalonBay (NYSE:AVB) is boosting its investment in what may be a coming hot neighborhood. The nation's largest apartment REIT, Equity Residential (NYSE:EQR) is set to start work on a 174-unit building in Georgetown stalled since 2012. Still a bit wary, UDR is buying rather than building - last month it agreed to acquire six suburban communities from Home Properties.
- Effective rents fell 1.4% in 2013, and rose just 0.4% last year - enough to scare off smaller players. REITs however, have access to relatively cheap capital, giving them the opportunity to step in while the market is soft to hopefully take advantage of the next upturn.
- According to Axiometrics, effective rents will climb 3.4% in 2016 versus 2.9% for the entire country. 2107 should see a 4.5% increase, with 3.6% estimated for 2018.
- Source: Bloomberg
- Previously: Multi-family action leads gain in housing starts (July 17)
Jun. 24, 2015, 9:47 AM
- Lennar is up 4.5% after blowing through estimates, including posting gross and operating margins ahead of previous guidance.
- ITB +1.3%, XHB +0.7%
- Toll Brothers (TOL +1.7%), Ryland (RYL +0.7%), KB Home (KBH +1.5%), Pulte (PHM +2%), D.R. Horton (DHI +1.7%), Hovnanian (HOV +1.5%), Beazer (BZH +1.6%).
- Previously: Lennar in high cotton in FQ2, up 4.7% post-earnings (June 24)
- Previously: Lennar beats by $0.15, beats on revenue (June 24)
Jun. 19, 2015, 10:09 AM
- KB Home CEO Jeffrey Mezger is confident of his company's ability to achieve "measurable year-over-year earnings growth in H2" after reporting new order growth of 33% in units and 38% in dollars in FQ2, and backlog growth of 39% in units and 57% in dollars.
- KB Home is up 6%, leading the ITB +1.4%, and XHB +0.8% even as the major averages slip.
- Toll Brothers (TOL +2.3%), Hovnanian (HOV +2.7%), Lennar (LEN +3%), Ryland (RYL +2%), D.R. Horton (DRI +2.5%), Pulte (PHM +2.5%)
- Previously: KB Home gains following earnings beat (June 19)
- Previously: KB Home beats by $0.02, beats on revenue (June 19)
Jun. 15, 2015, 9:44 AM
- Zigging higher while the rest of the market zags sharply lower are the homebuilders following this weekend's merger of Ryland Homes and Standard Pacific.
- While there have been a number of smaller deals over the past year, this one is more sizable, setting off hope of a broader - and necessary, according to some - consolidation in the fragmented sector.
- Lennar (LEN +1.9%), Toll Brothers (TOL +1.4%), M.D.C. Holdings (MDC +2.3%), M/I Homes (MHO -0.5%), NVR (NVR), D.R. Horton (DHI +1.5%), KB Home (KBH +0.7%), Beazer Homes (BZH +1.2%), PulteGroup (PHM +1.6%), Hovnanian (HOV flat)
- Previously: Industry eyes Ryland/Standard Pacific merger (June 15)
Jun. 11, 2015, 7:42 AM
Jun. 9, 2015, 10:14 AM
- The usually sunny Ara Hovnanian found himself unable to put lipstick on his company's pig of a quarter and the stock is lower by 14.4% in early action (the conference call begins at 11 ET).
- Topping off the poor results, interest rates are back on the rise, with the 10-year Treasury yield hitting a new high for the year at 2.44%.
- The other homebuilders are acting as if HOV's issues are company-specific: Toll Brothers (TOL -0.2%), Lennar (LEN -0.2%), PulteGroup (PHM -0.6%), D.R. Horton (DHI -0.2%), KB Home (KBH -0.8%), Ryland (RYL -0.6%), Standard Pacific (SPF flat).
- ETFs: ITB -0.2%, XHB -0.3%
May 27, 2015, 10:43 AM
- Toll Brothers (TOL -2.8%) managed to beat on the bottom line thanks to lower income taxes, but revenues actually fell from a year ago, while SG&A expense as a percent of revenue climbed 50 bps to 12.6%.
- Hovnanian (HOV -0.8%), Lennar (LEN -0.9%), Ryland (RYL -0.7%), Beazer (BZH -1%), Pulte (PHM -1.1%), D.R. Horton (DHI -1.1%)
- ETFs: ITB, XHB
- Previously: Toll Brothers reports mixed FQ2; early Q3 returns mixed as well (May 27)
- Previously: Toll Brothers beats by $0.02, misses on revenue (May 27)
May 27, 2015, 7:21 AM
- FQ2 net income of $67.9M or $0.37 per share vs. $65.2M and $0.35 one year ago.
- Home building deliveries of 1,195 units and $852.6M down 2% in units and 1% in dollars Y/Y. ASP of $713K vs. $706K.
- Net signed contracts of 1,931 units and $1.6B up 10% in units, 25% in dollars. ASP of $826K vs. $729K.
- Backlog of 4,387 units and $3.48B up 1% in units, 9% in dollars. ASP of $794K vs. $742K.
- Gross margin of 25.3% up 170 basis points from a year ago.
- Looking into FQ3, company says net contracts in the first four weeks were flat Y/Y thanks to a slow first week followed by robust improvements over the subsequent three weeks.
- Fiscal 2015 guidance is narrowed to deliveries of 5.3K-5.9K homes with ASP of $730K-$760K. Gross margin should be about 26%, with improvement coming in 2016.
- Earnings call at 11 ET
- Previously: Toll Brothers beats by $0.02, misses on revenue (May 27)
- TOL +0.4% premarket
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