Walmart (WMT) has a long history and strong brand name recognition. But is there reason to believe WMT stock could actually withstand an economic meltdown?
The NAHB Wells Fargo Housing Market Index, which measures homebuilder sentiment, peaked at 71 during the height of the housing bubble in late 2005. It bottomed out at 8 in early 2009.
Fannie Mae’s monthly National Housing Survey asked respondents if it’s a good time to buy and sell a house. They’re more confident that it’s a good time to sell.
For 2Q16, KB Home reported revenues of $811 million, which easily topped the Wall Street estimate consensus of $750 million. Revenues increased by 30% YoY.
US Treasury yields rose across the yield curve for the week ended May 20, 2016. This came as minutes of the FOMC April meeting raised the probability of a rate hike in June.
The NAHB Wells Fargo Housing Market Index measures homebuilder sentiment has been increasing steadily since 2009. Recently, it’s started to accelerate.
Last week, bond yields rose to 1.84% on the FOMC minutes. Note the Fed has set up the Market for rate hikes several times in the past couple of years only to get cold feet at the last moment.
Historically, the use of public construction dollars has been the big lever that the government uses to stimulate the economy. This dates back to the New Deal.
After an uneventful FOMC (Federal Open Market Committee) meeting last week where the Fed stood firm, all eyes turned to the jobs report this coming Friday, May 6.
D.R. Horton reported 2Q16 revenue of $2.7 billion—a 16% increase on a YoY basis and a sequential increase of ~14%. The revenue beat analysts’ expectations.
Over time, Pulte has lifted its gross margins and improved revenues. However, the stock has still lagged its peers, especially the S&P SPDR Homebuilder ETF (XHB).
Employment and wages are key indicators for the Fed Aside from employment, the most important indicator of economic well-being is wages. Despite falling unemployment, one of the conundrums facing the current labor market is flat real or inflation-adjusted wages. Over the past decade, wages have more or less kept pace with inflation, but they haven’t increased. Before the financial crisis, much of […]
The jobs report was the highlight of the week. Payrolls increased by 215,000. The labor force participation rate inched up for the fifth month in a row.
The PCE Index is the Fed’s preferred inflation measure and has important policy implications. The latest data shows that the inflation is running below the Fed’s 2.0% target.
There was a big fall in household formation in 2008. In 2005, household formation peaked at 1.9 million. By 2008, that number was just over 400 million.
For fiscal 1Q16, Toll Brothers’ earnings were $73.2 million, or $0.40 per share, down from its net income of $81.3 million, or $0.44 per share, a year ago.
US Treasury yields rose across the yield curve after upbeat consumer inflation data suggested that the Fed may hike interest rates earlier than expected.
Foreclosure completions fell by 1,000 units to 32,000 in December. Completions fell 23% year-over-year. However, 33,000 is still a relatively high number.
Treasury yields fell across the yield curve, except for three-month, six-month, and one-year Treasury bills, after the Bank of Japan introduced a negative interest rate.
PulteGroup’s (PHM) gross margins for 4Q15 came in at 23.5%, up 40 basis points on a year-over-year basis and down ten basis points from the third quarter.
D.R. Horton (DHI) sounded relatively optimistic on its conference call. It was clearly happy with the most recent quarter despite the stock price reaction.
Zoning protects existing property values by preventing incompatible uses of a property. It also protects residential properties from commercial development.
Zoning is the way that governments supervise land development and the kinds of uses each individual property may be directed toward for the public interest.
Housing affordability took a beating in July 2015 after reaching its high in January 2013. The higher ratio of the home affordability index signifies relatively higher home affordability to buyers.
A home is usually the most expensive asset that consumers can hold, and owning a home is among their lifetime goals. The question arises—why can’t more people own a house despite the availability of so many properties in the market?
In the quarter ending September 30, construction spending as a percentage of GDP rose to 6.1%. This was a big rise from a year ago when it stood at 5.4%.
The NAHB Wells Fargo Housing Market Index measures builder confidence, gauging how builders view current and future sales of single-family residences. It asks builders to characterize sales as good, fair, or poor.
The US Treasury yield curve was flat for the week ended December 18, 2015, as short-term yields fell. Medium- to long-term yields rose after US interest rates rose by 25 basis points.
According to the National Association of Home Builders (or NAHB), the housing market index fell by a single point to reach a level of 61.0 in December.
Housing starts rose from a downward-revised ~1.13 million to ~1.21 million in September 2015. This was above Wall Street estimates of just over 1.14 million.
In September, non-farm payrolls increased by 142,000, missing the Wall Street estimate of 200,000. Private payrolls increased by 118,000, while government jobs rose by 24,000.
Housing starts fell from a downward-revised ~1.16 million to ~1.13 million in August 2015. This was below Wall Street estimates of just over 1.16 million.
Lennar outperformed its peers based on the net profit margin, EPS, and PBV ratio. The ETFs outperformed Lennar based on the PE ratio and the PBV ratio.
Historically, construction spending has led economies out of recessions. This didn’t happen in the most recent recession, however, because of the overhang from the real estate bubble.
August payrolls in the private sector increased by 140,000, while government jobs rose by 33,000. Private services payrolls increased by 164,000 and manufacturing employment fell by 17,000.
Toll Brothers has exposure to some of the hottest markets, while avoiding some of the more downbeat markets like the most of the Midwest and parts of the Deep South.
Toll Brothers reported that the average selling price for 3Q15 was $724,000, a 1.5% increase on a quarter-over-quarter basis and a 1% decrease on a year-over-year basis.
Real estate stocks like DR Horton (DHI), PulteGroup (PHM), and Ventas (VTR) rose 1.74%, 0.55%, and 0.42%, respectively, at the close of trade on August 19.
The housing market index (or HMI), released monthly by the National Association of Home Builders (or NAHB) in association with Wells Fargo (WFC), is a weighted average of separate diffusion indexes.
Inflation represents a rise in the general price level in a country or region. The higher the inflation, the lower the quantum of a particular good that can be purchased.
Sales order backlog represents homes under contract but not closed or delivered. For orders in backlog, the company receives a customer contract and deposit, which may or may not be refundable.
The cost of homes sold comprises 84.4% of the company’s total costs, followed by SG&A (sales, general, and administrative) with 13%, and financial services expenses with 1.4%.
PulteGroup’s debt-to-equity ratio peaked to 1.7x in 2011. Since then it has been declining consistently due to debt reduction and stock repurchase initiatives.
PulteGroup is one of the largest homebuilding companies in the US. The company’s major competitors include D.R. Horton, Lennar, Toll Brothers, and KB Homes.
As part of its market segmentation strategy, D.R. Horton launched a variety of different brands, including D.R. Horton, America’s Builder, Express Homes, and Emerald Home.
D.R. Horton slowed the growth of its land and lot inventories in 2014 and increased homes inventories to get a larger share of new home demand and generate higher returns on land investments.
Strong inflation and housing data resulted in a rally in long-term bond yields. US Treasury yields rose marginally at the short end of the yield curve.
Acquisitions of homebuilding businesses provide D.R. Horton with immediate land and home inventories, as well as control of additional land and lot positions through option contracts.
