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MDC Gears Up to Report Q4 Earnings: Here's What to Expect
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M.D.C. Holdings, Inc. is slated to report fourth-quarter 2022 results on Jan 31, before the opening bell.
In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate by 11.6% and fell 0.5% from the year-ago period. Yet, revenues of this homebuilding company grew 10.8% year over year and topped the consensus mark by 2.6%.
Markedly, MDC reported better-than-expected earnings in seven of the last 10 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained stable at $1.53 per share. This indicates a 30.8% decrease from the year-ago earnings of $2.21 per share. The consensus mark for revenues is $1.34 billion, suggesting an 8.4% year-over-year decline.
MDC’s Homebuilding revenues are expected to have declined in the fourth quarter from the year-ago level due to soft housing demand and prevailing industry headwinds. The U.S. housing market has been grappling with uncertainties arising from high mortgage rates. This may have impacted the company’s revenues and orders in the to-be-reported quarter.
The Zacks Consensus Estimate for fourth-quarter Home Sales revenues is pegged at $1.32 billion, suggesting an 8.2% decrease from a year ago. The same for units delivered is pegged at 2,284 units, implying a decline from 2,663 units reported in the year-ago period. The company expects homes deliveries between 2,200 and 2,500 for the to-be-reported quarter, depicting a fall from 2,564 units a year ago.
It expects the average selling price or ASP, of homes delivered for the quarter to be between $570,000-$580,000, indicating an increase from $461,000 a year ago. The Zacks Consensus Estimate for average selling price is pegged at $572,000 per home, suggesting 6.1% year-over-year growth.
The consensus estimate for net new orders is currently pegged at 1,278, which suggests a 51.7% decrease from a year ago. The consensus estimate for backlog is 4,332 units, implying a 43.3% decline from fourth-quarter 2021.
Also, higher land, labor and material costs are expected to reflect on fourth-quarter’s margins to some extent. The company has been witnessing significant supply-chain disruptions, including shortages and delayed delivery of certain building materials and a tight labor market. These may have created difficulties for MDC in fulfilling customer demand, thereby affecting deliveries. MDC anticipates Housing gross margin (excluding impairments and warranty adjustments) to be 20-22% compared with 22% reported in the prior-year period.
For the fourth quarter, lower lumber prices and a higher average price of settlements are likely to have helped this leading homebuilder. In addition, the company’s Build-to-Order process and affordable product offerings may have somewhat aided the top line.
Furthermore, MDC’s consistent focus on the mortgage business is expected to have aided revenues in the quarter to be reported. Also, its Financial Services revenues are improving year over year. Yet, the consensus mark for Financial Services revenues of $28.5 million suggests a fall from $32.18 million reported a year ago.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for MDC for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: MDC has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #3.
Boise Cascade’s earnings topped the consensus mark in all the last four quarters, with the average being 30.9%. Earnings for the to-be-reported quarter are expected to grow 30.3% year over year.
Otis Worldwide Corporation (OTIS - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3.
OTIS’ earnings topped the consensus mark in all the last four quarters, with the average being 5.3%. Earnings for the to-be-reported quarter are expected to increase 1.4% year over year.
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank #2.
URI’s earnings topped the consensus mark in all the last four quarters, with the average being 9.5%. Earnings for the to-be-reported quarter are expected to grow 36.5% year over year.
Image: Bigstock
MDC Gears Up to Report Q4 Earnings: Here's What to Expect
M.D.C. Holdings, Inc. is slated to report fourth-quarter 2022 results on Jan 31, before the opening bell.
In the last reported quarter, the company’s earnings lagged the Zacks Consensus Estimate by 11.6% and fell 0.5% from the year-ago period. Yet, revenues of this homebuilding company grew 10.8% year over year and topped the consensus mark by 2.6%.
Markedly, MDC reported better-than-expected earnings in seven of the last 10 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has remained stable at $1.53 per share. This indicates a 30.8% decrease from the year-ago earnings of $2.21 per share. The consensus mark for revenues is $1.34 billion, suggesting an 8.4% year-over-year decline.
M.D.C. Holdings, Inc. Price and EPS Surprise
M.D.C. Holdings, Inc. price-eps-surprise | M.D.C. Holdings, Inc. Quote
Factors to Note
MDC’s Homebuilding revenues are expected to have declined in the fourth quarter from the year-ago level due to soft housing demand and prevailing industry headwinds. The U.S. housing market has been grappling with uncertainties arising from high mortgage rates. This may have impacted the company’s revenues and orders in the to-be-reported quarter.
The Zacks Consensus Estimate for fourth-quarter Home Sales revenues is pegged at $1.32 billion, suggesting an 8.2% decrease from a year ago. The same for units delivered is pegged at 2,284 units, implying a decline from 2,663 units reported in the year-ago period. The company expects homes deliveries between 2,200 and 2,500 for the to-be-reported quarter, depicting a fall from 2,564 units a year ago.
It expects the average selling price or ASP, of homes delivered for the quarter to be between $570,000-$580,000, indicating an increase from $461,000 a year ago. The Zacks Consensus Estimate for average selling price is pegged at $572,000 per home, suggesting 6.1% year-over-year growth.
The consensus estimate for net new orders is currently pegged at 1,278, which suggests a 51.7% decrease from a year ago. The consensus estimate for backlog is 4,332 units, implying a 43.3% decline from fourth-quarter 2021.
Also, higher land, labor and material costs are expected to reflect on fourth-quarter’s margins to some extent. The company has been witnessing significant supply-chain disruptions, including shortages and delayed delivery of certain building materials and a tight labor market. These may have created difficulties for MDC in fulfilling customer demand, thereby affecting deliveries. MDC anticipates Housing gross margin (excluding impairments and warranty adjustments) to be 20-22% compared with 22% reported in the prior-year period.
For the fourth quarter, lower lumber prices and a higher average price of settlements are likely to have helped this leading homebuilder. In addition, the company’s Build-to-Order process and affordable product offerings may have somewhat aided the top line.
Furthermore, MDC’s consistent focus on the mortgage business is expected to have aided revenues in the quarter to be reported. Also, its Financial Services revenues are improving year over year. Yet, the consensus mark for Financial Services revenues of $28.5 million suggests a fall from $32.18 million reported a year ago.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for MDC for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: MDC has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combinations
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Boise Cascade Company (BCC - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #3.
Boise Cascade’s earnings topped the consensus mark in all the last four quarters, with the average being 30.9%. Earnings for the to-be-reported quarter are expected to grow 30.3% year over year.
Otis Worldwide Corporation (OTIS - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #3.
OTIS’ earnings topped the consensus mark in all the last four quarters, with the average being 5.3%. Earnings for the to-be-reported quarter are expected to increase 1.4% year over year.
United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +1.31% and a Zacks Rank #2.
URI’s earnings topped the consensus mark in all the last four quarters, with the average being 9.5%. Earnings for the to-be-reported quarter are expected to grow 36.5% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.