stefaith

What Is Correct Way to Value Homebuilders?

To value hombuilders on the basis of 2001 profitability or 2001 returns on investment makes sense. However, most builders are much bigger now than they were in 2001 so to simply assume that eps will return to 2001 levels is naive.

They have more capital to deploy, have larger market shares, they are not the same companies that they were in 2001