For a company that appears to be in trouble, Street-beating numbers do come as a big surprise. And it's even better when we're talking about an industry that's been gasping for breath for a while now.
Beazer Homes'
Standout metrics
When some really important metrics start hopping over to the positive territory in a homebuilder's books, you know there's reason to get excited. Homebuilding revenues shot up to $335 million from $269 million a year ago, as home closings climbed 23% to 1,376 units. What's more, new home orders also rose 33% to 1,006 homes. Higher closures and orders are the two most crucial things homebuilders bank their hopes on.
Higher orders stand out in Beazer's case, as it primarily targets first-time buyers who fled the market after the expiry of the federal tax credits last year. Peer KB Home
Other homebuilders, too, have been reporting a flow of orders lately. Standard Pacific's
I am also amazed at Beazer's jump in backlogs -- an important indicator of future revenues -- to $334.5 million from $184.7 million a year ago. Note how this contrasts with Pulte Group's
The only not-so-impressive figure (other than the losses, of course) was Beazer's cancellation rate, which remained high at 34.2%.
Beazer's bottom line might not look impressive with a net loss of $43.2 million, but the fact that these losses have shrunk from $59.5 million a year ago is a bright ray of hope.
Building up hope
While industry-wide higher orders and healthier backlogs are great signs, recent data on housing have been interesting, too.
The National Association of Realtors has just reported a very surprising rise in the sale of previously owned homes in the U.S. last month. September new house sales also rose 5.7% sequentially. To top that, Freddie Mac's U.S. Economic and Housing Market Outlook for October highlighted a slow yet gradual pickup in new construction as well as rents this year. Is it the rock-bottom mortgage rates, or the unbelievably low house prices that are attracting home shoppers? Whatever it is, it's good news, ultimately.
Homebuilder stocks also went wild last month when The National Association of Home Builders/Wells Fargo Housing Market Index posted its highest one-month gain in more than a year, indicating improving consumer confidence.
Interestingly, higher sales for home improvement retailers such as Home Depot
The Foolish bottom line
Yet, although optimism about the sector is growing, Beazer still has a long way to go to turn its red into black and get a grip on its humongous debt.
Be patient and look around for other homebuilders who seem better positioned, till Beazer's financials start looking juicier. You nevertheless would not want to miss the bus should things truly start to pick up for Beazer. To be the first to know when this happens, add Beazer or any of the other housing stocks to your stock watchlist, our free and personalized stock-tracking service that keeps you updated on all your favorite companies.
- Add Beazer to your stock Watchlist.
- Add KB Home to your stock Watchlist.
- Add Standard Pacific to your stock Watchlist.
- Add Pulte to your stock Watchlist.
- Add Hovnanian to your stock Watchlist.
- Add Home Depot to your stock Watchlist.
