Category Archives: Consumer Discretionary
September Housing Market Update
The average rate on the 30-year mortgage has risen above 6.00% in response to the latest hike in the Fed Funds target rate. Freddie Mac’s Primary Mortgage Market Survey pegged the average rate at 6.29% this week. The CME’s Fed … Continue reading
Toll Brothers (TOL) 22Q3 Update
Toll Brothers’ 22Q3 EPS was $2.35, up 25.7% from 21Q3’s $1.87 and above my estimate of $2.22. Revenues increased 10.6% to $2.49 billion, slightly below my projections. Deliveries of 2,414 units fell 7.1%, more than expected, but the average sales … Continue reading
22Q2 Housing Market Update
Despite an accelerating slide in housing sales and production following this year’s rise in mortgage rates, my homebuilder stock price index has performed in line with its benchmarks since April. At current prices, homebuilding stocks trade at less than four … Continue reading
Thoughts on the Outlook for Homebuilding Stocks
Homebuilding stocks have had a rough 2022. Year-to-date (through 4/12), my equal-weighted index of 11 publicly-traded U.S. homebuilders has fallen 34.8%. That compares with declines of 7.7% in the S&P 500 and 11.5% in the Russell 2000. Following a three-fold … Continue reading
Toll Brothers (TOL) 22Q1 Update
Since my last report on December 9, 2021, Toll’s stock has fallen 26.3%, much more than the S&P Mid-Cap 400’s 2.6% decline. As I noted back then, shares of Toll and other homebuilders were ripe for a correction following their … Continue reading
Toll Brothers (TOL) 21Q4 Update
Toll Brothers reported stronger-than anticipated fiscal 21Q4 results that once again exceeded my and the consensus estimates. Its diluted earnings per share were $3.02, up 95% from $1.55 in 20Q4. My estimate was $2.51 and the consensus estimate was $2.50.
Toll Brothers 21Q3 Update
Toll Brothers reported stronger-than anticipated fiscal 21Q3 results that once again exceeded my estimates. Its diluted earnings per share were $1.86, up 71% from $0.59 in 20Q2. My estimate was $1.48 and the consensus estimate was $1.53.
2021 Market Outlook – Part 2: S&P 500 Sector Analysis
2020 was of course dominated by the impact of the pandemic on the economy and specifically on the revenues and profits of each of the S&P 500 constituents. There was a sharp stock market sell-off in March-April, followed by a … Continue reading
An Uncertain Outlook for Housing
2020 was a surprisingly solid year for housing in light of the pandemic and the havoc that it wreaked in other parts of the economy. December data will not be reported until later this month. I project that single-family housing … Continue reading
Housing Market Update
Despite continuing elevated unemployment and dampened consumer confidence, the housing market has been surprisingly strong in the months following the onset of the COVID-19 pandemic. According to the U.S. Commerce Dept., single-family housing starts for August were estimated at the … Continue reading
After the Quick Rebound, Investors Should Approach Homebuilding Stocks with Caution
Homebuilding stocks have been on a wild ride in 2020. They boomed from the start of the year, rising 19.1% (according to my index of 11 publicly-traded builders) to February 21, handily beating the 3.0% gain on the S&P 500 … Continue reading
Recent Observations on Bed Bath & Beyond
The investor optimism that followed the October 2019 appointment of Mark J. Tritton as Bed Bath & Beyond’s CEO and continued after the company gave a preliminary upbeat assessment of its performance early in the Christmas selling season gave way … Continue reading
A Strong Start for Housing
2019 was a solid year for U.S. housing. While still subject to modest revisions, government figures show that new residential sales increased 10.4% from an estimated 617,000 units in 2018 to 681,000 units in 2019. Single-family housing starts advanced 1.4% … Continue reading
Homebuilder Stocks Fall as Optimism About Global Economic Growth Rises
Homebuilding stocks have been the best performing of the 150-odd sectors in the Dow Jones U.S. Total Market Index, up 44.4% over the past 12 months as of November 8. Last year, they declined sharply in the face of Federal … Continue reading
A Solid First Half for Housing and the Builders
A typical analysis from policy makers, like the Federal Reserve, points out that activity in the housing market has declined so far this year; but that assertion focuses primarily on housing starts. A more complete picture from the national data … Continue reading
An Update on Bed Bath & Beyond
Shares of Bed Bath & Beyond have sold off sharply in recent weeks, but the stock is exceptionally cheap vs. its peers. If new leadership can accelerate the company’s transformation plan successfully, the shares have significant upside potential. The article explores both risks and opportunities for Bed Bath & Beyond as it enters the next phase of its transformation plan. Continue reading
Bed Bath & Beyond’s Next Generation Lab Store
A tour (with pictures) of the Bed Bath & Beyond East Hanover store. Continue reading
Impairments Spark a Sell-Off, But Position BZH for an Earnings Rebound
Beazer Homes (BZH) reported a fiscal 2019 second quarter loss of $3.28 per share, compared with earnings of $0.36 per share in the comparable prior year quarter. The loss included a large impairment charge and a much smaller gain on … Continue reading
Meritage Homes (MTH) 18Q1 Results
Meritage reported 18Q1 diluted EPS of $0.65 per share, down from $1.07 last year, but a penny ahead of consensus estimates. Home closing revenue declined 4% to $698.7 million, as a 2% increase in unit closings was more than offset … Continue reading
PulteGroup (PHM) 18Q1 Results
PulteGroup reported first quarter earnings of $166.8 million or $0.59 per share, even with a year ago, but still well ahead of the consensus estimate. Revenues were just short of $2.0 billion, up 1.4% from the prior year. Unit closings … Continue reading
Housing Market Update – February 2019
The outlook for housing (or more precisely, sentiment about the outlook for housing) has improved in recent weeks, primarily because of the decline in mortgage rates. The average rate on the 30-year mortgage has fallen by 57 basis points (bp) … Continue reading
Acme United Battles the Headwinds
2018 was a rough year for investors in Acme United Corporation’s (ACU) stock, including CEO Walter Johnsen who owns 15% of the outstanding shares. ACU’s 2018 total return was -38%, worse than the Zack’s Micro Cap Index’s 17% decline. The … Continue reading
Questions About ESL’s Debt Reduction Proposal for Sears
On Sept. 23, in a 13D filing with the Securities and Exchange Commission, ESL Investments attached a proposal that it had made to Sears Holding (SHLD) that would reduce SHLD’s total outstanding debt by 78% through a combination of asset … Continue reading
A Process of Adjustment for the Homebuilders
2018 has been rough for homebuilding stocks. The Lark Research Homebuilder Stock Index, which is an equal-weighted measure of the price performance of ten publicly-traded homebuilders, was down 19.9% year-to-date through August 3rd, far worse than the gains of 6.2% … Continue reading
StoneMor’s Unit Price Plummets as it Files its Delayed 10-K
Since peaking at $32.01 in July 2015, the MLP units of StoneMor Partners LP (STON) have lost nearly 90% of their value. The steepest part of the decline began in October 2016, just before STON cut its quarterly distribution in … Continue reading
Bed Bath But Not Beyond Hope
BBBY has lost 70% of its value over the past three years. Profits are down sharply mostly because of price competition. Store comparable net sales have been falling mid-single digits, offset by growth in online/mobile sales and other areas. Management … Continue reading
GM’s Q3 Results Beat Expectations
General Motors Company (GM) reported third quarter EPS of $0.08 vs. $1.76 in the prior year. Excluding unusual items – a $2.3 billion, $1.24 per share deferred tax adjustment related to the sale of GM’s European operations in 2017 and … Continue reading
Sears Canada Moves Toward Liquidation
Sears Canada (SCC.TO) announced yesterday (10/10) that it would seek court approval to close all of its stores and lay off nearly all of its 13,000 employees. The move comes after the company’s Executive Chairman Brandon Strazl failed to obtain … Continue reading
Sears Holdings (SHLD): On a Course to Bankruptcy
It has been about 12 years since Edward S. Lampert acquired Sears and merged it with Kmart to create Sears Holdings (SHLD). Despite numerous spin-offs, asset sales and store closings, which have provided positive returns to shareholders, Sears Holdings today … Continue reading
2017 Housing Market Outlook
Housing market activity has strengthened in recent months. This has raised the hope of another leg up in the recovery. Yet, investors are still skeptical about the industry’s future prospects.
KBH Looks to Extend Gains in 2017
KB Home (KBH) was the sixth largest builder in the U.S. in 2016, according to Builder Magazine. The company operates in four regions, nine states and 39 metropolitan markets. It generates most of its sales in California, with operations in … Continue reading