A month has gone by since the last earnings report for M.D.C. Holdings, Inc. . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is M.D.C. Holdings, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MDC's Q4 Earnings & Revenues Beat, Net New Orders Surge 697%
M.D.C. Holdings reported better-than-expected results for fourth-quarter 2023. Its earnings topped the Zacks Consensus Estimate and increased year over year.
Revenues surpassed the consensus estimate but declined year over year.
MDC’s uptrend can be attributed to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders. This was driven by a significant decline in cancellations and its use of financing incentives aimed at reducing the negative impact of higher mortgage rates for its buyers.
Investors should note that MDC will no longer hold its fourth-quarter 2023 earnings conference call, as previously announced, as it has signed a definitive agreement to be acquired by a wholly-owned subsidiary of Sekisui House in an all-cash transaction, with an equity value of $4.9 billion.
Earnings & Revenue Discussion
The company reported quarterly earnings of $1.56 per share, which topped the consensus estimate of $1.44 by 8.3% and increased 44.4% from the year-ago quarter’s figure of $1.08.
Total revenues (including Home sale revenues and Financial Services revenues) of $1.35 billion topped the consensus mark of $1.29 billion by 4.1% but declined 11.4% on a year-over-year basis from $1.52 billion reported a year ago.
Segment Details
Homebuilding: Home sale revenues of $1.31 billion decreased 11.9% from the prior year’s levels due to a 6% lower average selling price (“ASP”) and lower unit deliveries by 154 units. Homebuilding revenues topped our model’s prediction of $1.06 billion or a year-over-year decline of 24.7%. Units delivered were down 6% from the year-ago level to 2,400 homes.
Net new orders grew by a whopping 697% year over year to 1,515 units, driven by a 660% increase in the monthly sales absorption pace of 2.17 homes per community. The value of net orders increased 996% from the year-ago quarter’s levels to $816.2 million, backed by a 38% increase in ASP.
At the end of the fourth quarter, the backlog totaled 1,890 homes, down 36% from a year ago. Potential housing revenues from backlog plunged 34% from the prior-year period’s levels to $1.16 billion, despite a 4% higher ASP.
Housing gross margin expanded 370 basis points (bps) year over year to 18.7%. Selling, general and administrative expenses — as a percentage of housing revenues — increased 80 bps from the year-ago quarter’s figure to 9.7%.
Financial Services: The segment's revenues rose 13.7% year over year to $36.7 million.
2023 Highlights
For the year, the company reported earnings of $5.29 per share, down 31% from its 2022 level of $7.67. Home sale revenues declined 19.1% to $4.52 billion from $5.59 billion reported in 2022 on the back of strong ASP, partially offset by 3% lower deliveries. Financial Services’ revenues were down 6.9% year over year to $122.6 million.
Balance Sheet & Cash Flow
MDC had cash and cash equivalents of $1.48 billion in the Homebuilding segment and $163.8 million in the Financial Services unit as of Dec 31, 2023. This compares with 2022-end numbers of $696.1 million and $17.9 million, respectively.
Total inventories at 2023-end declined to $3.3 billion from $3.52 billion at 2022-end. Lots owned and optioned of 22,415 at 2023-end were down 11% from 25,302 at 2022-end.
Net cash provided by operating activities was $561.6 million in 2023 compared with $905.6 million a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.31% due to these changes.
VGM Scores
At this time, M.D.C. Holdings, Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise M.D.C. Holdings, Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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M.D.C. Holdings, Inc. (MDC) Down 0.1% Since Last Earnings Report: Can It Rebound?
A month has gone by since the last earnings report for M.D.C. Holdings, Inc. . Shares have lost about 0.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is M.D.C. Holdings, Inc. due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
MDC's Q4 Earnings & Revenues Beat, Net New Orders Surge 697%
M.D.C. Holdings reported better-than-expected results for fourth-quarter 2023. Its earnings topped the Zacks Consensus Estimate and increased year over year.
Revenues surpassed the consensus estimate but declined year over year.
MDC’s uptrend can be attributed to the current new home market, which continues to benefit from the lack of existing home supply. The company witnessed notable improvements in its net new orders. This was driven by a significant decline in cancellations and its use of financing incentives aimed at reducing the negative impact of higher mortgage rates for its buyers.
Investors should note that MDC will no longer hold its fourth-quarter 2023 earnings conference call, as previously announced, as it has signed a definitive agreement to be acquired by a wholly-owned subsidiary of Sekisui House in an all-cash transaction, with an equity value of $4.9 billion.
Earnings & Revenue Discussion
The company reported quarterly earnings of $1.56 per share, which topped the consensus estimate of $1.44 by 8.3% and increased 44.4% from the year-ago quarter’s figure of $1.08.
Total revenues (including Home sale revenues and Financial Services revenues) of $1.35 billion topped the consensus mark of $1.29 billion by 4.1% but declined 11.4% on a year-over-year basis from $1.52 billion reported a year ago.
Segment Details
Homebuilding: Home sale revenues of $1.31 billion decreased 11.9% from the prior year’s levels due to a 6% lower average selling price (“ASP”) and lower unit deliveries by 154 units. Homebuilding revenues topped our model’s prediction of $1.06 billion or a year-over-year decline of 24.7%. Units delivered were down 6% from the year-ago level to 2,400 homes.
Net new orders grew by a whopping 697% year over year to 1,515 units, driven by a 660% increase in the monthly sales absorption pace of 2.17 homes per community. The value of net orders increased 996% from the year-ago quarter’s levels to $816.2 million, backed by a 38% increase in ASP.
At the end of the fourth quarter, the backlog totaled 1,890 homes, down 36% from a year ago. Potential housing revenues from backlog plunged 34% from the prior-year period’s levels to $1.16 billion, despite a 4% higher ASP.
Housing gross margin expanded 370 basis points (bps) year over year to 18.7%. Selling, general and administrative expenses — as a percentage of housing revenues — increased 80 bps from the year-ago quarter’s figure to 9.7%.
Financial Services: The segment's revenues rose 13.7% year over year to $36.7 million.
2023 Highlights
For the year, the company reported earnings of $5.29 per share, down 31% from its 2022 level of $7.67. Home sale revenues declined 19.1% to $4.52 billion from $5.59 billion reported in 2022 on the back of strong ASP, partially offset by 3% lower deliveries. Financial Services’ revenues were down 6.9% year over year to $122.6 million.
Balance Sheet & Cash Flow
MDC had cash and cash equivalents of $1.48 billion in the Homebuilding segment and $163.8 million in the Financial Services unit as of Dec 31, 2023. This compares with 2022-end numbers of $696.1 million and $17.9 million, respectively.
Total inventories at 2023-end declined to $3.3 billion from $3.52 billion at 2022-end. Lots owned and optioned of 22,415 at 2023-end were down 11% from 25,302 at 2022-end.
Net cash provided by operating activities was $561.6 million in 2023 compared with $905.6 million a year ago.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended upward during the past month.
The consensus estimate has shifted 5.31% due to these changes.
VGM Scores
At this time, M.D.C. Holdings, Inc. has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise M.D.C. Holdings, Inc. has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.