The stocks we looked at are NVR Corp. (NYSE: NVR), Toll Brothers Inc. (NYSE: TOL), PulteGroup Inc. (NYSE: PHM), Hovnanian Enterprises Inc. (NYSE: HOV), DR Horton Inc. (NYSE: DHI), Beazer Homes USA Inc. (NYSE: BZH), KB Home (NYSE: KBH), and Lennar Corp. (NYSE: LEN). We also took a look at home improvement retailers The Home Depot Inc. (NYSE: HD) and Lowe’s Companies Inc. (NYSE: LOW).
NVR Corp. (NYSE: NVR) traded at $851.50 and has a market value of around $4.4 billion. The consensus target price from Thomson Reuters is $853.20 and the 52-week range is $554.71-$879.99. NVR does not pay a dividend. The implied upside to the consensus target is less than 1%, and we note that the target is below the 52-week high. Trailing P/E is 31.29 and forward P/E is 17.74. Short interest in the stock totals about 216,000 shares, or 4.5% of the float.
Toll Brothers Inc. (NYSE: TOL) traded at $33.39 and has a market value of around $5.6 billion. The consensus target price from Thomson Reuters is $32.91 and the 52-week range is $13.16-$33.68. Toll Brothers does not pay a dividend. Today’s share price exceeds the consensus target price. Trailing P/E is 62 and forward P/E is 31.89. Short interest in the stock totals about 10.6 million shares, or 8.9% of the float.
PulteGroup Inc. (NYSE: PHM) traded at $14.53 after setting a new 52-week high of $14.60 earlier today. The company has a market value of around $5.6 billion. The consensus target price from Thomson Reuters is $13.03 and the prior 52-week range is $3.29-$14.08. PulteGroup does not pay a dividend. Today’s share price exceeds the consensus target price. Trailing P/E is negative and forward P/E is 16.15. Short interest in the stock totals about 31.8 million shares, or 9.4% of the float.
Hovnanian Enterprises Inc. (NYSE: HOV) traded at $3.13 and has a market value of around $393 million. The consensus target price from Thomson Reuters is $1.93 and the 52-week range is $0.89-$3.31. Hovnanian does not pay a dividend. Today’s share price exceeds the consensus target price. Trailing and forward P/E are both negative. Short interest in the stock totals about 28.2 million shares, or 40.8% of the float.
DR Horton Inc. (NYSE: DHI) traded at $19.76 after setting a new 52-week high of $19.89 earlier today. The company has a market value of around $6.3 billion. The consensus target price from Thomson Reuters is $19.66 and the prior 52-week range is $8.03-$19.35. DR Horton pays a dividend yield of 0.8%. Today’s share price exceeds the consensus target price. Trailing P/E is 7.46 and forward P/E is 21.51. Short interest in the stock totals about 34.8 million shares, or 15.3% of the float.
Beazer Homes USA Inc. (NYSE: BZH) traded at $3.06 and has a market value of around $305 million. The consensus target price from Thomson Reuters is $3.10 and the 52-week range is $1.35-$3.98. Beazer does not pay a dividend. The implied upside to the consensus target is about 1%, and we note that the target is below the 52-week high. Trailing and forward P/E are both negative. Short interest in the stock totals about 22.5 million shares, or 30.1% of the float.
KB Home (NYSE: KBH) traded at $11.64 and has a market value of around $907 million. The consensus target price from Thomson Reuters is $10.55 and the 52-week range is $5.02-$13.12. KB Home pays a dividend yield of 0.9%. Today’s share price exceeds the consensus target price. Trailing P/E is negative and forward P/E is 233.00. Short interest in the stock totals about 31.1 million shares, or 57.4% of the float.
Lennar Corp. (NYSE: LEN) traded at $33.94 after posting a new 52-week high of $34.20 earlier today. The company has a market value of around $6.4 billion. The consensus target price from Thomson Reuters is $31.23 and the prior 52-week range was $12.14-$33.14. Lennar pays a dividend yield of 0.5%. Today’s share price exceeds the consensus target price. Trailing P/E is 13.47 and forward P/E is 24.30. Short interest in the stock totals about 33.7 million shares, or 22% of the float.
The Home Depot Inc. (NYSE: HD) traded at $57.38 after posting a new 52-week high of $57.44 earlier today. The company has a market value of around $86.4 billion. The consensus target price from Thomson Reuters is $58.13 and the prior 52-week range was $31.03-$57.18. Home Depot pays a dividend yield of 2%. The implied upside to the consensus target is about 1%, and we note that the target is above the 52-week high. Trailing P/E is 20.58 and forward P/E is 16.99. Short interest in the stock totals about 20 million shares, or 1.6% of the float.
Lowe’s Companies Inc. (NYSE: LOW) traded at $28.66 and has a market value of around $33 billion. The consensus target price from Thomson Reuters is $29.59 and the 52-week range is $18.28-$32.29. Lowe’s pays a dividend yield of 2.3%. The implied upside to the consensus target is about 3%, and we note that the target is below the 52-week high. Trailing P/E is 19.19 and forward P/E is 14.04. Short interest in the stock totals about 16.2 million shares, or 1.4% of the float.
With little or no implied gains available, P/E ratios indicate that both NVR and PulteGroup may offer the best choices for a value/growth play among the homebuilders stocks. KB Home’s forward P/E is astronomical, and the negative ratios at Hovnanian and Beazer are not encouraging signs. The others, with forward P/E ratios of 20 or more, might also be fully valued in the near term.
As for the home improvement stores, either might be a reasonable alternative, especially given their dividend yields and relatively modest forward P/E ratios (at least compared to some of the homebuilders).
Paul Ausick
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