One of the smallest national homebuilders, Brookfield Homes
What analysts say:
- Buy, sell, or waffle? Brookfield's small size -- its market cap is less than $1 billion -- means it's flying below most analysts' radar. Only two cover Brookfield; one says "hold," while the other says "sell."
- Revenues. Only one of them has provided an estimate on revenues. He's expecting revenues to grow 9% to $156 million for the quarter.
- Earnings. Profits are expected to fall, but unlike the other homebuilders, Brookfield is still forecast to construct a profit: $0.25 per share, a 68% drop from last year's results.
What management says:
Being a small builder can have its drawbacks, in that it can't command the same negotiating power that Hovnanian
What management does:
Because of its limited exposure to the housing market -- it generally sells luxury homes in only a handful of markets -- Brookfield has been able to maintain margins above industry levels. Yet Washington, D.C. and California have also been some of the most volatile areas affecting housing. That's forced the company to offer greater incentives and amenities, which ate into profits.
12/05 |
03/06 |
06/06 |
09/06 |
12/06 |
|
---|---|---|---|---|---|
Gross |
33.8% |
34.3% |
34.7% |
34.8% |
30.6% |
Operating |
33.6% |
33.4% |
33.5% |
33.2% |
29.2% |
Net |
17.8% |
17.9% |
19.1% |
19.7% |
16.7% |
One Fool says:
When I was in the D.C. area this past February, I took a tour of a number of Brookfield homes and found that they did offer a lot of upgrades for the money. The planned communities look thoughtfully laid out, providing community centers that help meld a division together.
Yet for all its size and nimbleness, Brookfield is highly leveraged, which should prompt caution when considering the stock as an investment. At 35%, MDC Holdings has one of the lowest total debt-to-capital ratios in the industry. Brookfield, on the other hand, has a 58% DTC ratio, exceeding those of Hovnanian (58%), Centex (55%), Ryland
Related Foolishness:
Brookfield Homes has earned a one-star rating from Motley Fool CAPS, the new investor intelligence community. You can add your voice to the new stock rating service by joining today. It's free!
MDC Holdings is a recommendation of Motley Fool Hidden Gems. A 30-day trial subscription lets you build up an understanding of why this homebuilder is different than the rest.
Fool contributor Rich Duprey does not own any of the stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.