Spotting Winners: TopBuild (NYSE:BLD) And Home Builders Stocks In Q3

November 28, 2024 at 04:42 AM EST

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The end of the earnings season is always a good time to take a step back and see who shined (and who not so much). Let’s take a look at how home builders stocks fared in Q3, starting with TopBuild (NYSE: BLD).

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 11 home builders stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 1.9% while next quarter’s revenue guidance was below.

In light of this news, share prices of the companies have held steady as they are up 2.2% on average since the latest earnings results.

TopBuild (NYSE: BLD)

Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE: BLD) is a distributor and installer of insulation and other building products.

TopBuild reported revenues of $1.37 billion, up 3.6% year on year. This print fell short of analysts’ expectations by 1.5%. Overall, it was a slower quarter for the company with full-year EBITDA and revenue guidance missing analysts’ expectations.

“We delivered a strong performance with third quarter sales of $1.37 billion and adjusted EBITDA of $285 million, achieving the highest level of quarterly sales and profit in our history,” said Robert Buck, President and Chief Executive Officer.

Unsurprisingly, the stock is up 6.9% since reporting and currently trades at $387.01.

Is now the time to buy TopBuild? Access our full analysis of the earnings results here, it’s free.

Best Q3: Skyline Champion (NYSE: SKY)

Founded in 1951, Skyline Champion (NYSE: SKY) is a manufacturer of modular homes and buildings in North America.

Skyline Champion reported revenues of $616.9 million, up 32.9% year on year, in line with analysts’ expectations. The business had an exceptional quarter with an impressive beat of analysts’ sales volume and EBITDA estimates.

The market seems happy with the results as the stock is up 11.6% since reporting. It currently trades at $101.51.

Is now the time to buy Skyline Champion? Access our full analysis of the earnings results here, it’s free.

Weakest Q3: D.R. Horton (NYSE: DHI)

One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE: DHI) builds a variety of new construction homes across multiple markets.

D.R. Horton reported revenues of $10 billion, down 4.8% year on year, falling short of analysts’ expectations by 1.9%. It was a disappointing quarter as it posted full-year revenue guidance missing analysts’ expectations.

D.R. Horton delivered the weakest performance against analyst estimates and slowest revenue growth in the group. As expected, the stock is down 5.9% since the results and currently trades at $169.75.

Read our full analysis of D.R. Horton’s results here.

NVR (NYSE: NVR)

Known for its unique land acquisition strategy, NVR (NYSE: NVR) is a respected homebuilder and mortgage company in the United States.

NVR reported revenues of $2.73 billion, up 6.4% year on year. This print surpassed analysts’ expectations by 1.2%. Taking a step back, it was a satisfactory quarter as it also logged an impressive beat of analysts’ backlog estimates.

The stock is down 4.7% since reporting and currently trades at $9,194.

Read our full, actionable report on NVR here, it’s free.

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 $651.9 million, up 5.6% year on year. This number surpassed analysts’ expectations by 1.6%. Aside from that, it was a mixed quarter as it also logged a solid beat of analysts’ adjusted operating income estimates but a significant miss of analysts’ backlog estimates.

The stock is up 6.7% since reporting and currently trades at $110.30.

Read our full, actionable report on LGI Homes here, it’s free.

Market Update

Thanks to the Fed’s rate hikes in 2022 and 2023, inflation has been on a steady path downward, easing back toward that 2% sweet spot. Fortunately (miraculously to some), all this tightening didn’t send the economy tumbling into a recession, so here we are, cautiously celebrating a soft landing. The cherry on top? Recent rate cuts (half a point in September, a quarter in November) have kept 2024 stock markets frothy, especially after Trump’s November win lit a fire under major indices and sent them to all-time highs. However, there's still plenty to ponder — tariffs, corporate tax cuts, and what 2025 might hold for the economy.

Want to invest in winners with rock-solid fundamentals? Check out our 9 Best Market-Beating Stocks and add them to your watchlist. These companies are poised for growth regardless of the political or macroeconomic climate.

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