Get 40% Off
🤯 This Tech Portfolio is up 29% YTD! Join Now to Get April’s Top PicksGet The Picks – Just 99 USD

Here's Why You Should Add TRI Pointe (TPH) To Your Portfolio

Published 11/14/2017, 12:00 AM
Updated 07/09/2023, 06:31 AM

Shares of TRI Pointe Group, Inc. (NYSE:TPH) have gained 28.1% over the last three months, substantially outperforming the 18.7% growth of its industry. Additionally, this Irvine, CA-based homebuilder, which mainly involves in the design, construction and sale of single-family homes, outperformed the industry in each of the four-week, 12-week and 52-week time frames.

Moreover, the Zacks Consensus Estimate for current-year’s earnings has increased 2.3% in the last 60 days, thus reflecting optimism in the stock’s prospects and substantiating its Zacks Rank #1 (Strong Buy). Meanwhile, earnings estimates have also moved north by 5.4% for 2018.

You can see the complete list of today’s Zacks #1 Rank stocks here.




What Makes TRI Pointe a Solid Pick?

Stellar Third-Quarter Performance: Recently, the company came up with robust quarterly results with both top and bottom lines exceeding the Zacks Consensus Estimates by 1.2% and 6.7%, respectively. Also, the company’s earnings and revenues improved 118.2% and 23.2%, respectively, driven by 9% growth in home deliveries and 3% rise in average sales price of homes in the quarter.

Importantly, the company’s backlog of $1.5 billion at the quarter end increased 56% from $950.2 million a year ago. Its new home orders were also up 36% year over year in the quarter on a 9% increase in average selling communities.

TRI Pointe remains well positioned to outperform its peers through better absorptions and deliveries from the higher-margin California market.

Solid Estimated EPS Growth: The homebuilder’s current-quarter earnings are expected to increase 77.8% year over year, comfortably outpacing the industry’s average projected growth of 16.7%. The company’s projected sales growth is a healthy 40.3%, higher than the industry average of 3.2%.

Meanwhile, the company’s EPS growth is expected to increase 12.5% for the current year on 15.8% growth in revenues.

In fact, for the company, nothing is more important than earnings growth, as surging profit levels are often an indication of strong prospects (and stock price gains).

Reasonably Valued Stock: Because of homebuilders’ asset-driven nature, it makes sense to value them based on price-to-book ratio. The company currently has a trailing 12-month P/B ratio of 1.44. This is quite cheap compared with the industry as well as the market at large, as the current P/B for the industry and S&P 500 is at 1.93 and 3.64, respectively. Its lower-than-market positioning calls for an upside in the quarters ahead.

Solid Industry Fundamental: Sales of new U.S. single-family homes rose in September, hitting the highest level in nearly 10 years after reporting sales slump in recent months. Per the recently released report by the Commerce Department, new home sales surged 18.9% to a seasonally adjusted annual rate of 667,000 units in September amid an increase in all four regions. That was the highest level since October 2007 and followed August’s upwardly revised sales pace of 561,000 units.

The housing/homebuilding industry has been riding high on steady job and wage growth, historically low mortgage rates and rapidly increasing household formation. The positive momentum is evident from the robust Zacks Industry Rank (Top 26% out of 256 industries).

Consequently, homebuilding companies like TRI Pointe, KB Home (NYSE:KBH) , D.R. Horton, Inc. (NYSE:DHI) , PulteGroup Inc. (NYSE:PHM) and others are expected to gain from such positive industry fundamentals and higher demand.

Today's Stocks from Zacks' Hottest Strategies

It's hard to believe, even for us at Zacks. But while the market gained +18.8% from 2016 - Q1 2017, our top stock-picking screens have returned +157.0%, +128.0%, +97.8%, +94.7%, and +90.2% respectively.

And this outperformance has not just been a recent phenomenon. Over the years it has been remarkably consistent. From 2000 - Q1 2017, the composite yearly average gain for these strategies has beaten the market more than 11X over. Maybe even more remarkable is the fact that we're willing to share their latest stocks with you without cost or obligation.

See Them Free>>



PulteGroup, Inc. (PHM): Free Stock Analysis Report

KB Home (KBH): Free Stock Analysis Report

D.R. Horton, Inc. (DHI): Free Stock Analysis Report

TRI Pointe Group, Inc. (TPH): Free Stock Analysis Report

Original post

Zacks Investment Research

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.