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Landsea Homes (LSEA) Buys Hanover Family Builders for $179.3M
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Landsea Homes Corporation (LSEA - Free Report) has acquired an Orlando-based homebuilder, Hanover Family Builders (HFB). This buyout positions Landsea Homes as the seventh-largest homebuilder in Central Florida based on LTM home deliveries. The $179.3-million deal price is subject to certain post-closing adjustments and the assumption of debt of about $69.3 million.
Buyout Synergies
Founded in 2017, Hanover Family Builders delivered 632 homes in 2021 at an average selling price of $328,323 and ended the year with more than 4,100 lots under control, 469 homes in backlog worth more than $200 million, and 18 active communities.
This addition enhanced Landsea Homes’ lots under control to more than 12,800. The deal further augmented the company’s asset-light strategy by increasing controlled lots to approximately 50% of total lot inventory.
The deal further boosted its active community count by more than 50% from 2021-end and the company expects the buyout to help it in becoming one of the leading homebuilders in the Orlando area.
Landsea Homes entered the Florida housing market in 2021 with the acquisition of Vintage Estate Homes and started offering homes in the Orlando area, including Palm Bay, Palm Coast, Ormond Beach, Lake Helen, Sorrento, Merritt Island, and DeBary. The company has expanded its presence in key markets comprising Arizona, Northern and Southern California, Texas, and Florida since its formation eight years ago.
John Ho, chief executive officer of Landsea Homes, said, “With 469 homes in backlog as of December 31, 2021 at an attractive margin profile, we expect that our acquisition of Hanover Family Builders will have an immediate impact to our earnings and will drive our return on beginning equity to exceed 20% in fiscal year 2022 and beyond.”
Share Price Performance
Shares of this Zacks Rank #3 (Hold) homebuilder have declined 11.3% over the past six months against the industry’s 4.7% growth. That said, Landsea’s solid track record of entering new markets via acquisitions and scaling local operations in a rapid fashion will drive growth. In December 2021, Landsea Homes bought more than 900 of the remaining final lots in Anthem Texas, thereby bringing the company in the highly desirable greater Austin market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With a record quarter-end backlog, a strong fundamental outlook, and a unique and differentiated product profile, Landsea Homes is poised to perform well in 2022.
Some Better-Ranked Stocks in Construction Sector
Toll Brothers Inc. (TOL - Free Report) currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master-planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening product lines, price points and geographies.
Toll Brothers’ earnings for fiscal 2022 are expected to rise 49.9% year over year.
D.R. Horton (DHI - Free Report) currently carries a Zacks Rank #2 (Buy). This Texas-based prime homebuilder continues to gain from industry-leading market share, a solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.
D.R. Horton’s earnings are expected to rise 27.6% year over year in fiscal 2022.
Quanta Services, Inc. (PWR - Free Report) currently carries a Zacks Rank #2. Based in Houston, TX, Quanta is gaining from a three-pronged growth strategy focusing on the timely delivery of projects to exceed customer expectations, leverage core business to expand in complementary adjacent service lines and enable the continuation of exploring new service lines. Overall, the company’s engineering and project management capabilities allow it to capitalize on the market trends that are currently skewed toward the engineering, procurement, and construction or EPC model.
Quanta’s earnings are expected to grow 28.3% in 2022.
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Landsea Homes (LSEA) Buys Hanover Family Builders for $179.3M
Landsea Homes Corporation (LSEA - Free Report) has acquired an Orlando-based homebuilder, Hanover Family Builders (HFB). This buyout positions Landsea Homes as the seventh-largest homebuilder in Central Florida based on LTM home deliveries. The $179.3-million deal price is subject to certain post-closing adjustments and the assumption of debt of about $69.3 million.
Buyout Synergies
Founded in 2017, Hanover Family Builders delivered 632 homes in 2021 at an average selling price of $328,323 and ended the year with more than 4,100 lots under control, 469 homes in backlog worth more than $200 million, and 18 active communities.
This addition enhanced Landsea Homes’ lots under control to more than 12,800. The deal further augmented the company’s asset-light strategy by increasing controlled lots to approximately 50% of total lot inventory.
The deal further boosted its active community count by more than 50% from 2021-end and the company expects the buyout to help it in becoming one of the leading homebuilders in the Orlando area.
Landsea Homes entered the Florida housing market in 2021 with the acquisition of Vintage Estate Homes and started offering homes in the Orlando area, including Palm Bay, Palm Coast, Ormond Beach, Lake Helen, Sorrento, Merritt Island, and DeBary. The company has expanded its presence in key markets comprising Arizona, Northern and Southern California, Texas, and Florida since its formation eight years ago.
John Ho, chief executive officer of Landsea Homes, said, “With 469 homes in backlog as of December 31, 2021 at an attractive margin profile, we expect that our acquisition of Hanover Family Builders will have an immediate impact to our earnings and will drive our return on beginning equity to exceed 20% in fiscal year 2022 and beyond.”
Share Price Performance
Shares of this Zacks Rank #3 (Hold) homebuilder have declined 11.3% over the past six months against the industry’s 4.7% growth. That said, Landsea’s solid track record of entering new markets via acquisitions and scaling local operations in a rapid fashion will drive growth. In December 2021, Landsea Homes bought more than 900 of the remaining final lots in Anthem Texas, thereby bringing the company in the highly desirable greater Austin market. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
With a record quarter-end backlog, a strong fundamental outlook, and a unique and differentiated product profile, Landsea Homes is poised to perform well in 2022.
Some Better-Ranked Stocks in Construction Sector
Toll Brothers Inc. (TOL - Free Report) currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master-planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening product lines, price points and geographies.
Toll Brothers’ earnings for fiscal 2022 are expected to rise 49.9% year over year.
D.R. Horton (DHI - Free Report) currently carries a Zacks Rank #2 (Buy). This Texas-based prime homebuilder continues to gain from industry-leading market share, a solid acquisition strategy, a well-stocked supply of land, lots, and homes along with affordable product offerings across multiple brands.
D.R. Horton’s earnings are expected to rise 27.6% year over year in fiscal 2022.
Quanta Services, Inc. (PWR - Free Report) currently carries a Zacks Rank #2. Based in Houston, TX, Quanta is gaining from a three-pronged growth strategy focusing on the timely delivery of projects to exceed customer expectations, leverage core business to expand in complementary adjacent service lines and enable the continuation of exploring new service lines. Overall, the company’s engineering and project management capabilities allow it to capitalize on the market trends that are currently skewed toward the engineering, procurement, and construction or EPC model.
Quanta’s earnings are expected to grow 28.3% in 2022.