As the Q2 earnings season comes to a close, it’s time to take stock of this quarter’s best and worst performers in the home builders industry, including LGI Homes (NASDAQ: LGIH) and its peers.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 12 home builders stocks we track reported a satisfactory Q2. As a group, revenues beat analysts’ consensus estimates by 4.1%.
Luckily, home builders stocks have performed well with share prices up 10.9% on average since the latest earnings results.
LGI Homes (NASDAQ: LGIH)
Based in Texas, LGI Homes (NASDAQ: LGIH) is a homebuilding company specializing in constructing affordable, entry-level single-family homes in desirable communities across the United States.
LGI Homes reported revenues of $483.5 million, down 19.8% year on year. This print was in line with analysts’ expectations, and overall, it was a satisfactory quarter for the company with an impressive beat of analysts’ EBITDA estimates but a significant miss of analysts’ backlog estimates.
“We delivered solid results in the second quarter including profitability metrics at the high end of our prior guidance range,” said Eric Lipar, Chairman and Chief Executive Officer of LGI Homes.
Interestingly, the stock is up 10.7% since reporting and currently trades at $60.40.
Is now the time to buy LGI Homes? Access our full analysis of the earnings results here, it’s free.
Best Q2: Champion Homes (NYSE: SKY)
Founded in 1951, Champion Homes (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.
Champion Homes reported revenues of $701.3 million, up 11.7% year on year, outperforming analysts’ expectations by 9.2%. The business had an incredible quarter with an impressive beat of analysts’ sales volume estimates and a beat of analysts’ EPS estimates.
Champion Homes scored the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 12.6% since reporting. It currently trades at $74.56.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free.
Weakest Q2: Lennar (NYSE: LEN)
One of the largest homebuilders in America, Lennar (NYSE: LEN) is known for constructing affordable, move-up, and retirement homes across a range of markets and communities.
Lennar reported revenues of $8.38 billion, down 4.4% year on year, exceeding analysts’ expectations by 1.1%. Still, it was a softer quarter as it posted a significant miss of analysts’ adjusted operating income estimates and a significant miss of analysts’ EBITDA estimates.
Interestingly, the stock is up 21.1% since the results and currently trades at $132.55.
Read our full analysis of Lennar’s results here.
Installed Building Products (NYSE: IBP)
Founded in 1977, Installed Building Products (NYSE: IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Installed Building Products reported revenues of $760.3 million, up 3.1% year on year. This number beat analysts’ expectations by 6.7%. Overall, it was an incredible quarter as it also logged a solid beat of analysts’ EBITDA estimates and an impressive beat of analysts’ adjusted operating income estimates.
The stock is up 22.3% since reporting and currently trades at $259.
Read our full, actionable report on Installed Building Products here, it’s free.
Taylor Morrison Home (NYSE: TMHC)
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE: TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $2.03 billion, up 2% year on year. This result topped analysts’ expectations by 3.9%. Taking a step back, it was a satisfactory quarter as it also produced a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.
The stock is flat since reporting and currently trades at $66.72.
Read our full, actionable report on Taylor Morrison Home here, it’s free.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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