No sector was hurt as much as housing during the Great Recession of the last decade. Most analysts said that housing would take a decade or more to recover. California, Nevada, Texas, Arizona, and Florida were among the hardest hit states. Now, the U.S. economy is improving and the labor market is recovering. Inventories of unsold homes are down and builders are now actively building again. At the Ira Sohn Conference 2013, Steve Eisman from Emrys Partners listed these 3 homebuilders as his favorites.
Lennar Corporation (NYSE:LEN) builds single-family homes in Arizona, California, Colorado, Delaware, Florida, Georgia, Maryland, Massachusetts, Minnesota, Nevada, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Texas, Virginia, and Washington. Lennar Corporation (NYSE:LEN) also offers financial services to homeowners through its subsidiaries Universal American Mortgage Company and North American Title Company.
The company also serves as an investor and manager of funds that invests in real estate assets through its Rialto Investments division. Lennar Corporation (NYSE:LEN) delivered 13,802 new homes in 2012. The average sales price of a Lennar Corporation (NYSE:LEN) home was $255,000 in fiscal 2012, compared to $244,000 in fiscal 2011 and $243,000 in fiscal 2010.
Lennar Corporation (NYSE:LEN) has been a great performer over the past year, rising over 62%. The company just posted better than expected earnings of $0.26 per share versus expectations of $0.15. Revenue also came in better than expected at $989.9 million compared to expectations of only $898 million.
Lennar Corporation (NYSE:LEN) is positioned well as the housing market continues to recover. In the prime New Jersey market, Lennar has its Greenbriar communities targeting retirees with its “Everything’s Included” buyers program. The Greenbriar communities have a number of housing options and offer numerous amenities, including a golf course, tennis courts, and a marina. In the south, Lennar is rolling out new developments in fast-growing areas of Florida, Georgia, and Texas.
Standard Pacific Corp. (NYSE:SPF) builds single-family homes in Arizona, California, Colorado, Florida, North Carolina, South Carolina, and Texas. Some highlights from the company’s 2013 first quarter earnings include:
- Net income of $21.8 million, or $0.05 per diluted share, vs. $8.5 million, or $0.02 per diluted share.
- Net new orders of 1,394, up 49%; Dollar value of net new orders up 74%.
- Backlog of 1,851 homes, up 90%; Dollar value of backlog up 117%.
- Average selling price of $375,000, up 9%.
- 947 new home deliveries, up 48%
- Gross margin from home sales of 21%, compared to 20.3% last year.
I really liked this earnings report. The company is performing very well and is well-positioned as the economy strengthens. The stock price is evidence of this as it is up over 76% in the past year.