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The Zacks Analyst Blog Highlights: KB Home, NVR, PulteGroup and M.D.C. Holdings

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For Immediate Release

Chicago, IL – July 28, 2017 – announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include KB Home (NYSE:(KBH - Free Report) Free Report), NVR, Inc. (NYSE:(NVR - Free Report) Free Report), PulteGroup, Inc. (NYSE:(PHM - Free Report) Free Report) and M.D.C. Holdings, Inc. (NYSE:(MDC - Free Report) Free Report).

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Here are highlights from Thursday’s Analyst Blog:

New & Existing Home Sales Data Out: 4 Housing Stocks to Consider

This week, two sets of housing data for the month of June were released -- existing-home sales data from the National Association of Realtors (NAR) and new residential sales data from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

Existing Home Sales Decline

According to the NAR report, existing home-sales dipped 1.8% (from May) in June with only the Midwest witnessing an increase in sales. Median existing-home price for all housing types increased 6.5% from the year-ago period to $263,800 in June, reflecting a new peak and the 64th straight month of year-over-year gains.

Low Supply Hitting Existing Home Sales

Low supply was the key reason for the decline in existing-home sales. With supply remaining low and price continuing to increase, interested buyers are being forced to remain on the sidelines.

Housing inventory declined 0.5% at the end of June and was 7.1% lower than the year-ago period, representing a year-over-year decline for 25 consecutive months.

New Home Sales Up

Meanwhile, according to the Census Bureau and the U.S. Department of Housing and Urban Development, new single-family house sales were 610,000 in Jun 2017, up 0.8% from the revised rate of 605,000 in May and 9.1% above the year-ago estimate of 559,000.

Existing Home Sales Data a Cause for Concern?

Given the decline in existing-home sales, should one avoid investing in this sector? Not really -- according to the NAR report, demand remains strong with affordable listings being picked up immediately. Moreover, despite the market challenges, sales continue to track slightly above last year’s pace.

Not just this, promising housing starts data was released earlier this month by the Census Bureau and the U.S. Department of Housing and Urban Development for the month of Jun 2017. Privately-owned housing starts grew 8.3% from May 2017 and 2.1% from the year-ago period while single-family housing starts were up 6.3% compared to May. Building permits also increased (up 7.4% from May and 5.1% from Jun 2016) in Jun 2017.

Moreover, the home builders industry enjoys a good Zacks industry rank (Top 8% out of 256 industries). The industry has outperformed the broader market (S&P 500) year-to-date (YTD) as well. Favorable industry fundamentals, pent-up demand, job gains, income growth and relatively low mortgage interest rates should support housing sales.

Our Picks

KB Home (NYSE:(KBH - Free Report) Free Report):Los Angeles, CA-based KB Home is among the largest and most recognized homebuilding companies in the U.S. The company sells and builds new homes designed primarily for first-time, move-up and active adult homebuyers. KB Home’s focus is on first-time buyers, which represents the largest demand segment. The company has a strong earnings track record with results surpassing expectations in each of the last four quarters with an average surprise of 12.47%. A solid backlog and a favorable market environment bode well for KB Home which reported better-than-expected second quarter fiscal 2017 earnings along with raising its housing revenue guidance for the year. Earnings estimates for fiscal 2017 and fiscal 2018 are up 5.6% and 5.1%, respectively, over the last 30 days. YTD, the Zacks Rank #1 (Strong Buy) stock, has gained 46.6%, substantially outperforming the 29.9% rally of the industry it belongs to.

KBH also has a VGM style score of “A.” The VGM style score is a useful tool that allows investors to gain an insight into a stock’s strengths and weaknesses. While “V” stands for Value, “G” stands for Growth and “M” for Momentum -- the score is a weighted combination of these three metrics. Our research shows that stocks with a VGM Score of “A” or “B” when combined with a Zacks Rank #1 or #2 (Buy) offer the best upside potential. You can see the complete list of today’s Zacks #1 Rank stocks here.

NVR, Inc. (NYSE:(NVR - Free Report) Free Report): Reston, VA-based NVR is one of the nation's largest homebuilding and mortgage banking companies. NVR, a Zacks Rank #1 stock has a pretty good earnings track record with the company surpassing expectations in three of the last four quarters. Earnings estimates are on the rise with 2017 and 2018 estimates up 7.3% and 4.2%, respectively, over the last 7 days. YTD, NVR stock has shot up 60.5%, significantly outperforming the industry it belongs to.  

PulteGroup, Inc. (NYSE:(PHM - Free Report) Free Report): Atlanta, GA-based PulteGroup is one of the largest, versatile and most experienced homebuilders in the U.S. The company has a strong earnings track record having surpassed expectations in three of the last four quarters and meeting expectations in the remaining quarter. The company caters to all major buyer groups: first-time, move up and active adults. PulteGroup, which has a VGM score of “A,” is a Zacks Rank #2 stock.

YTD, PulteGroup stock is up 32.2%, surpassing the performance of the industry it belongs to.

M.D.C. Holdings, Inc. (NYSE:(MDC - Free Report) Free Report): Denver, CO-based M.D.C. is one of the largest homebuilders in the U.S. with its subsidiaries having homebuilding operations across the country, including the metropolitan areas of Denver, Colorado Springs, Salt Lake City, Las Vegas, Phoenix, Tucson, Riverside-San Bernardino, Los Angeles, San Diego, Orange County, San Francisco Bay Area, Sacramento, Washington D.C., Baltimore, Orlando, Jacksonville, South Florida and Seattle. The company has surpassed earnings expectations in 3 of the last four quarters and will be reporting second quarter results on Aug 1.

The Zacks Rank #2 stock has a VGM score of “A” and has outperformed the industry it belongs to with shares gaining 37.8% YTD.

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About Zacks Equity Research

Zacks Equity Research provides the best of quantitative and qualitative analysis to help investors know what stocks to buy and which to sell for the long-term.

Continuous coverage is provided for a universe of 1,150 publicly traded stocks. Our analysts are organized by industry which gives them keen insights to developments that affect company profits and stock performance. Recommendations and target prices are six-month time horizons.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit information about the performance numbers displayed in this press release.

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