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5 Reasons to Add M.D.C. Holdings (MDC) to Your Portfolio Now
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The housing market is witnessing good tidings in recent times. Homebuilding has picked up due to a healthy job market that boosted demand for homes. It goes without saying that higher home prices and mortgage rates are currently having little impact on the housing market. This looks like a good time to invest in housing stocks, such as M.D.C. Holdings, Inc. . Engaged in the construction, sale and related financing of residential housing, this Zacks Rank #2 (Buy) company has solid prospects and should make a valuable addition to your portfolio.
Stock Price Movement
Shares of M.D.C. Holdings returned over 23.3% in the last one year, much higher than the Building Products - Miscellaneous industry’s gain of 15.3%. Healthy housing industry and strong demand trends should drive the stock’s performance in the upcoming quarters as well.
Earnings & Revenue Growth
M.D.C. Holdings makes for a great pick in terms of growth investment. Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects for the company in question.
M.D.C. Holdings has historical earnings per share (EPS) growth rate of 33.8% compared with the industry average of 20.1%. However, investors should really focus on its projected growth. The company is looking to grow at a rate of 26.8%, higher than the industry average of 15.9%.
Propelling the earnings forward is the company’s solid revenue growth story. Notably, projected sales growth for the current year is 12.5%, higher than the broader industry’s estimate of 10%.
For all these reasons, M.D.C. Holdings currently has a Growth Score of ‘A’ on our style score system that helps us identify potential outperformers.
Valuation Looks Rational
M.D.C. Holdings has a Value Style Score of ‘A’, putting it in the top 20% of all stocks we cover from this perspective. The Value Style Score condenses all valuation metrics into one actionable score. This helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount.
The company is currently trading at a trailing 12-months Price / Earnings (P/E) ratio of 14.8 while the S&P 500 industry average stands at 20.28. Moreover, its forward P/E ratio (price compared to this year’s earnings) stands lower at 11.65. This indicates that a slightly more value-oriented path may be ahead for M.D.C. Holdings.
Coming to sales, the company is currently trading at a Price/Sales (P/S) ratio of 0.66, significantly lower than the S&P 500 average of 3.08. Some prefer this metric over other value-focused ones because sales are harder to manipulate than earnings.
Often overlooked, the Price/Cash flow (P/CF) ratio can be a great indicator of value. This ratio doesn’t take amortization and depreciation into account and gives an accurate picture of the financial health of a business. M.D.C. Holdings has a P/CF of 9.68, lower than the industry’s average of 11.29.
All these ratios point at the undervaluation of the company in comparison to the industry. Thus, it is a good time for investors to consider the stock.
Estimate Revisions
Over the last 60 days, the Zacks Consensus Estimate for current year’s earnings has moved up 1.6%, reflecting two upward revisions versus none downwards. Also, next year’s earnings estimates inched up 1.1% on the back of one upward revision as against no downward revision. Positive earnings estimate revision indicates analysts’ confidence in the stock and add to the optimism.
VGM Score
M.D.C. Holdings has a VGM score of ‘A’. The VGM Score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth, and promising momentum across the board.
Stocks with a VGM Score of ‘A’ or ‘B’ and a Zacks Rank #1 (Strong Buy) or 2 provide even better returns, on an average. The combination of M.D.C. Holdings’ Zacks Rank #2 and VGM score of ‘A’ makes us reasonably confident about the stock.
Other Key Picks
Some other top-ranked stocks in the same industry include KB Home (KBH - Free Report) , Lennar Corporation (LEN - Free Report) and PulteGroup, Inc. (PHM - Free Report) .
The company surpassed earnings estimates in all of the past four quarters, with an average beat of 7.3%.
Lennar, a Zacks Rank #2 stock, is expected to witness 8% earnings growth in FISCAL 2017.
PulteGroup, also a Zacks Rank #2 stock, is expected to witness 31.5% earnings growth in 2017.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>
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5 Reasons to Add M.D.C. Holdings (MDC) to Your Portfolio Now
The housing market is witnessing good tidings in recent times. Homebuilding has picked up due to a healthy job market that boosted demand for homes. It goes without saying that higher home prices and mortgage rates are currently having little impact on the housing market. This looks like a good time to invest in housing stocks, such as M.D.C. Holdings, Inc. . Engaged in the construction, sale and related financing of residential housing, this Zacks Rank #2 (Buy) company has solid prospects and should make a valuable addition to your portfolio.
Stock Price Movement
Shares of M.D.C. Holdings returned over 23.3% in the last one year, much higher than the Building Products - Miscellaneous industry’s gain of 15.3%. Healthy housing industry and strong demand trends should drive the stock’s performance in the upcoming quarters as well.
Earnings & Revenue Growth
M.D.C. Holdings makes for a great pick in terms of growth investment. Arguably, nothing is more important than earnings growth as surging profit levels is often an indication of strong prospects for the company in question.
M.D.C. Holdings has historical earnings per share (EPS) growth rate of 33.8% compared with the industry average of 20.1%. However, investors should really focus on its projected growth. The company is looking to grow at a rate of 26.8%, higher than the industry average of 15.9%.
Propelling the earnings forward is the company’s solid revenue growth story. Notably, projected sales growth for the current year is 12.5%, higher than the broader industry’s estimate of 10%.
For all these reasons, M.D.C. Holdings currently has a Growth Score of ‘A’ on our style score system that helps us identify potential outperformers.
Valuation Looks Rational
M.D.C. Holdings has a Value Style Score of ‘A’, putting it in the top 20% of all stocks we cover from this perspective. The Value Style Score condenses all valuation metrics into one actionable score. This helps investors steer clear of ‘value traps’ and identify stocks that are truly trading at a discount.
The company is currently trading at a trailing 12-months Price / Earnings (P/E) ratio of 14.8 while the S&P 500 industry average stands at 20.28. Moreover, its forward P/E ratio (price compared to this year’s earnings) stands lower at 11.65. This indicates that a slightly more value-oriented path may be ahead for M.D.C. Holdings.
Coming to sales, the company is currently trading at a Price/Sales (P/S) ratio of 0.66, significantly lower than the S&P 500 average of 3.08. Some prefer this metric over other value-focused ones because sales are harder to manipulate than earnings.
Often overlooked, the Price/Cash flow (P/CF) ratio can be a great indicator of value. This ratio doesn’t take amortization and depreciation into account and gives an accurate picture of the financial health of a business. M.D.C. Holdings has a P/CF of 9.68, lower than the industry’s average of 11.29.
All these ratios point at the undervaluation of the company in comparison to the industry. Thus, it is a good time for investors to consider the stock.
Estimate Revisions
Over the last 60 days, the Zacks Consensus Estimate for current year’s earnings has moved up 1.6%, reflecting two upward revisions versus none downwards. Also, next year’s earnings estimates inched up 1.1% on the back of one upward revision as against no downward revision. Positive earnings estimate revision indicates analysts’ confidence in the stock and add to the optimism.
VGM Score
M.D.C. Holdings has a VGM score of ‘A’. The VGM Score rates each stock on their combined weighted styles, helping to identify those with the most attractive value, best growth, and promising momentum across the board.
Stocks with a VGM Score of ‘A’ or ‘B’ and a Zacks Rank #1 (Strong Buy) or 2 provide even better returns, on an average. The combination of M.D.C. Holdings’ Zacks Rank #2 and VGM score of ‘A’ makes us reasonably confident about the stock.
Other Key Picks
Some other top-ranked stocks in the same industry include KB Home (KBH - Free Report) , Lennar Corporation (LEN - Free Report) and PulteGroup, Inc. (PHM - Free Report) .
KB Home sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
The company surpassed earnings estimates in all of the past four quarters, with an average beat of 7.3%.
Lennar, a Zacks Rank #2 stock, is expected to witness 8% earnings growth in FISCAL 2017.
PulteGroup, also a Zacks Rank #2 stock, is expected to witness 31.5% earnings growth in 2017.
Looking for Ideas with Even Greater Upside?
Today's investment ideas are short-term, directly based on our proven 1 to 3 month indicator. In addition, I invite you to consider our long-term opportunities. These rare trades look to start fast with strong Zacks Ranks, but carry through with double and triple-digit profit potential. Starting now, you can look inside our home run, value, and stocks under $10 portfolios, plus more. Click here for a peek at this private information >>