FMHQ (Friday Morning Housing Quant)

Takeaway: The builder complex has started 4Q solidly in the green with most of the names performing in-line with what beta would predict.

Our FMHQ (Friday Morning Housing Quant) tables present the state of the publicly traded homebuilders in a visually-friendly, quantitative format that takes about 60 seconds to consume. 

 

Quick Quant Takeaways: 

  • Housing Macro | Election Cycle: We profiled the stark and recurrent pattern of housing performance alongside the election cycle last month (see:  Election Cycle Analysis --> Will Housing Trump the Market?).  The behavioral underpinning is relatively straightforward – housing is the largest, mostly broadly held asset in the country and populist pandering does not include policy platforms anchored on crushing the primary or singular source of net wealth for a significant percentage of households.  According to the NHBR (Here) early evidence out of New Hampshire suggests housing again sits as a central topic of constituency concern. According to the UNH Survey, “ 90 percent of Granite Staters say housing affordability is a problem in New Hampshire, and three-quarters say presidential candidates should focus on it … only 13 percent say the candidates should put “no focus” on it.”  The drumbeat of housing-as-an-issue newsflow is likely to only get more steady from here. Moreover, recent chatter has HUD Secretary Julian Castro (HERE) being mentioned as a potential VP candidate for Clinton. 

  • Performance Roundup: Housing stock returns are off to a solid start thus far in 4Q15. The absolute returns for ITB and XHB are +4.3% and +4.1% 4QTD vs the S&P 500 +5.4%. Meanwhile, the average builder QTD return is +5.5%, but this is positively skewed almost +200 bps by HOV, which is +23.7% QTD. Our preferred four horsemen among the builders are KBH, BZH, LEN & NVR (+5.1%, +5.7%, +3.4%, +2.3%). 
  • Valuation: The cheapest names in the group currently are BZH (8.9x), TMHC (9.5x) and MTH (9.6x), while the most expensive are NVR (14.6x), LEN (13.2x), and TOL (13.2x).


FMHQ (Friday Morning Housing Quant) - BQ 1

 

FMHQ (Friday Morning Housing Quant) - BQ 2

 

FMHQ (Friday Morning Housing Quant) - BQ 3

 

FMHQ (Friday Morning Housing Quant) - BQ 4 

 

 

Joshua Steiner, CFA

 

Christian B. Drake


Cartoon of the Day: Bulls Leading the People

Investors rejoiced as centrist Emmanuel Macron edged out far-right Marine Le Pen in France's election day voting. European equities were up as much as 4.7% on the news.

read more

McCullough: ‘This Crazy Stat Drives Stock Market Bears Nuts’

If you’re short the stock market today, and your boss asks why is the Nasdaq at an all-time high, here’s the only honest answer: So far, Nasdaq company earnings are up 46% year-over-year.

read more

Who's Right? The Stock Market or the Bond Market?

"As I see it, bonds look like they have further to fall, while stocks look tenuous at these levels," writes Peter Atwater, founder of Financial Insyghts.

read more

Poll of the Day: If You Could Have Lunch with One Fed Chair...

What do you think? Cast your vote. Let us know.

read more

Are Millennials Actually Lazy, Narcissists? An Interview with Neil Howe (Part 2)

An interview with Neil Howe on why Boomers and Xers get it all wrong.

read more

6 Charts: The French Election, Nasdaq All-Time Highs & An Earnings Scorecard

We've been telling investors for some time that global growth is picking up, get long stocks.

read more

Another French Revolution?

"Don't be complacent," writes Hedgeye Managing Director Neil Howe. "Tectonic shifts are underway in France. Is there the prospect of the new Sixth Republic? C'est vraiment possible."

read more

Cartoon of the Day: The Trend is Your Friend

"All of the key trending macro data suggests the U.S. economy is accelerating," Hedgeye CEO Keith McCullough says.

read more

A Sneak Peek At Hedgeye's 2017 GDP Estimates

Here's an inside look at our GDP estimates versus Wall Street consensus.

read more

Cartoon of the Day: Green Thumb

So far, 64 of 498 companies in the S&P 500 have reported aggregate sales and earnings growth of 6.1% and 16.8% respectively.

read more

Europe's Battles Against Apple, Google, Innovation & Jobs

"“I am very concerned the E.U. maintains a battle against the American giants while doing everything possible to sustain so-called national champions," writes economist Daniel Lacalle. "Attacking innovation doesn’t create jobs.”

read more

An Open Letter to Pandora Management...

"Please stop leaking information to the press," writes Hedgeye Internet & Media analyst Hesham Shaaban. "You are getting in your own way, and blowing up your shareholders in the process."

read more