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MDC's Stockholders Approves Merger Deal With Sekisui House

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M.D.C. Holdings, Inc. recently unveiled that about 99.8% of its stockholders have approved a proposal for the merger agreement between MDC and Sekisui House, Ltd.

On Jan 18, Sekisui House — one of the top-tier house manufacturers in Japan — announced that it had signed a definitive agreement to acquire MDC in an all-cash transaction of $4.9 billion.

Per the agreement, MDC shareholders will receive $63.00 per share in cash, which represents an approximately 19% premium to MDC's closing stock price on Jan 17 and an approximately 41% premium to MDC's 90-day volume-weighted average trading price, subject to the terms and conditions of the agreement.

The acquisition is now expected to close in the second quarter of 2024, subject to the satisfaction of customary closing conditions.

Stock Performance

This Zacks Rank #2 (Buy) company’s stock gained 18.6% post the merger announcement, outperforming the Zacks Building Products - Home Builders industry’s 11.8% growth.

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The company’s earnings for first-quarter 2024 moved upward to $1.12 per share from $1.07 over the past 60 days, reflecting 3.7% year-over-year growth. Its revenue estimate also indicates 7.3% year-over-year growth.

For more than 50 years, MDC has completed the construction of more than 240,000 homes and has emerged as a top 10 homebuilder in the United States. Its ability to navigate through varying housing market cycles while maintaining business resilience, creating significant shareholder value and becoming an industry-leading dividend yield for investors is commendable. MDC’s strategic decision to combine with Sekisui House is a testament to its focus on maximizing investors' value and delivering significant cash proceeds for shareholders.

Other Key Picks

Some other top-ranked in the same space are Toll Brothers, Inc. (TOL - Free Report) , Dream Finders Homes, Inc. (DFH - Free Report) and Century Communities, Inc. (CCS - Free Report) . Each stock presently sports a Zacks Rank of 1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Toll Brothers: Based in Horsham, PA, Toll Brothers is gaining from strong market demand, combined with its policy of boosting its supply of spec homes and focusing on operational efficiency. Also, TOL’s emphasis on affordable luxury communities and its build-to-order model bodes well. Since mid-January, TOL has experienced a notable surge in demand coinciding with the onset of the spring selling season. Considering the upward market trend, TOL expects home deliveries of 10,000-10,500 units in fiscal 2024, which implies growth from 9,597 units in fiscal 2023.

Toll Brothers has an expected revenue and earnings growth rate of 0.7% and 11.1%, respectively, for the current year (ending October 2024). The Zacks Consensus Estimate for current-year earnings per share (EPS) has improved to $13.73 from $13.32 over the past 30 days.

Dream Finders Homes: This Jacksonville, FL-based company operates as a holding company for Dream Finders Homes LLC, which is engaged in the homebuilding business in the United States. DFH operates through four segments: Southeast, Mid-Atlantic, Midwest, and Financial Services. DFH designs, constructs, and sells single-family entry-level, first-time and second-time move-up homes, as well as active adult homes and custom homes. DFH markets its homes under various brands, including Dream Finders Homes, DF Luxury, Craft Homes, and Coventry Homes.

Dream Finders Homes has an expected revenue and earnings growth rate of 15.7% and 12.5%, respectively, for the current year. The consensus estimate for 2024 EPS has improved to $3.14 from $2.81 over the past 30 days.

Century Communities: This Greenwood Village, CO-based company engages in the design, development, construction, marketing, and sale of single-family attached and detached homes. Century Communities continues to focus on increasing its community count and growth strategies. With the increasing market demand for homes, CCS began to reduce incentive offerings across the communities.

The consensus estimate for CCS’ 2024 EPS has been upwardly revised to $10.06 from $8.58 over the past 60 days. EPS for 2024 is expected to grow 24.4% on 11.1% higher revenues.

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