The new kid on the block
For the last twelve months, the company has brought in $1.44 billion in revenue. On this revenue, the company earned $430 million. It recently purchased Dallas and Houston home builder Darling Homes.
Revenues have been growing for the last three years while overall costs have declined. In 2012, total revenues grew by 4.8%. Net income shot up from $71 million to $430 million due to an income tax credit of $260 million. Without this tax credit, net income would have been around $119 million – still a 67% increase from 2011.
In all of 2012, the company closed on 4,500 homes. In January and February of 2013, the company closed on nearly 1,000 homes — it is already seeing a lot of growth this year.
With such a recent IPO, it is difficult to project where the stock and company will go. But, the home building industry should see major growth in the next year. Taylor Morrison Home Corp (NYSE:TMHC) is a great company — watch as it proves its worth in the public eye.
The almost-new kid on the block
Taylor Morrison Home Corp (NYSE:TMHC) isn’t the first home builder to hold an IPO this year; Tri Pointe Homes Inc (NYSE:TPH) had its IPO on Jan. 31. This company is considerably smaller than Taylor Morrison, with a market cap of only $539 million.
Tri Pointe Homes Inc (NYSE:TPH) recently announced it the acquisition of 301 lots in Southern California. It plans on opening one new community at the end of this year and three more in 2014 in these locations. These homes will be priced between $400,000 and $600,000.
The company has only been around for 3.5 years and closed on only 144 homes in 2012. It has enough land and lots in development to carry production into 2015. For the short-term, at least, the company should see excellent earnings growth.
Tri Pointe Homes Inc (NYSE:TPH) barely compares to large home builders in terms of homes closed. PulteGroup, Inc. (NYSE:PHM) closed on 4,162 homes during 2012 and had 1,256 under construction or already completed. Adding its 1,119 model homes, it had over 6,500 total homes during 2012. It expects to grow its total production this year as it completes its backlog orders. PulteGroup, Inc. (NYSE:PHM) is considerably larger than Tri Pointe with a market cap over $7.1 billion.
Tri Pointe Homes Inc (NYSE:TPH) is a very small competitor but it has a lot of growth potential. Investors should keep an eye on this company for the next year or so.
What to expect
UCP LLC and William Lyon Homes are two home builders exploring initial public offerings. Tri Pointe Homes Inc (NYSE:TPH) was the first home builder to file an IPO in almost nine years. The market is welcoming back these companies and investors are taking note. Pay attention to Tri Pointe Homes Inc (NYSE:TPH) and Taylor Morrison Home Corp (NYSE:TMHC) as they prove their worth with home expansions this year.
These new IPOs have two strong forces fueling their growth this year: the number of houses for sale and the average price of homes for sale. The number of homes on the market is 10% higher than one year ago. The cycle of home sales goes from newly manufactured homes to resales to short sales. Short sales represented only 24% of total sales last month. At the same time last year, they represented 33%. As fewer short sales make up total purchases, home sales will shift up in the cycle.
The average sale price for a home on the market is $173,000. This price is up 11% from last year. As home prices rise, manufacturers have the ability to sell homes at a higher price and grow their gross margins. Also, with higher sale prices, homeowners who are looking to upgrade their homes will have more capital to spend on a new home.
Clearly these homebuilder IPOs have a lot going for them this year.
The article Check Out these New IPOs originally appeared on Fool.com and is written by Austin Higgins.
Copyright © 1995 – 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.
