By
Brian D. Pacampara
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More Articles
October 7, 2010
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Based on the aggregated intelligence of 170,000-plus investors participating in Motley Fool CAPS, the Fool's free investing community, homebuilder Standard Pacific (NYSE: SPF ) has received the dreaded one-star ranking.
With that in mind, let's take a closer look at Standard Pacific's business and see what CAPS investors are saying about the stock right now.
Standard Pacific facts
| Headquarters (Founded) |
Irvine, Calif. (1986) |
| Market Cap |
$421.4 million |
| Industry |
Homebuilding |
| Trailing-12-Month Revenue |
$1.2 billion |
| Management |
CEO Kenneth Campbell, III
CFO John Stephens
|
| Return on Capital (Average, Past 3 Years) |
0.8% |
| Compound Annual Revenue Growth (Over Past 3 Years) |
(28.4%) |
| Cash/Debt |
$696.6 million / $1.3 billion |
| Competitors |
PulteGroup (NYSE: PHM )
Lennar (NYSE: LEN )
D.R. Horton (NYSE: DHI )
Beazer Homes (NYSE: BZH )
|
Sources: Capital IQ (a division of Standard & Poor's) and Motley Fool CAPS.
On CAPS, 58% of the 241 All-Star members who have rated Standard Pacific believe the stock will underperform the S&P 500 going forward. These bears include All-Stars DarthMaul09 and Beorn10, both of whom are ranked in the top 3% of our community.
Just three days ago, DarthMaul09 included Standard Pacific as part of the seemingly unsustainable housing rally:
Although the housing stocks look like they have begun to rebound, I believe that this is another illusion with further pain still to come. Only when the government admits that they are powerless to fix the problems and the housing markets hits a real bottom, will a recovery be possible. Until then, we live the dream.
Over the past three months, Standard Pacific is up 19%, while the housing sector as a whole has gained about half that amount. Although Standard Pacific's debt-to-equity of 300% -- higher than that of rivals Pulte (133%), Lennar (149%), D.R. Horton (90%), and even Beazer (267%) -- has given its shares some serious bang in the recent rally, our community hasn't forgotten that leverage works in both directions. According to the economic picture that CAPS All-Star Beorn10 paints, Standard Pacific seems particularly vulnerable:
Home builders and the regional banks are both hoping for a housing recovery to support the value of their assets and to help grow profits, but although the market is rising there does not appear to be a similar recovery in the financial health of most of the home buyers. If regional banks go back into survival mode, then even if home builders are able to make a profit by selling new homes at below existing home prices the lack of available credit may freeze home sales and take down some of the weaker home builders.
What do you think about Standard Pacific, or any other stock for that matter? If you want to retire rich, you need to protect your portfolio from any undue risk. Staying away from dangerous stocks is crucial to securing your financial future, and on Motley Fool CAPS, thousands of investors are working every day to flag them. CAPS is 100% free, so get started!
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