MDC Gears Up to Report Q3 Earnings: Here's What to Know
M.D.C. Holdings, Inc. MDC is scheduled to report third-quarter 2023 results on Oct 26 before market open.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 79.7% and 21.1%, respectively. However, on a year-over-year basis, earnings and revenues declined 52.1% and 23.6%, respectively.
MDC’s earnings beat the consensus mark in two of the trailing four quarters and missed the same on the other two occasions, the average surprise being 46%.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share moved up to $1.18 from $1.17 in the past 60 days. However, the estimated figure indicates a 40.4% decline from the year-ago quarter’s earnings of $1.98 per share.
M.D.C. Holdings, Inc. Price and EPS Surprise
M.D.C. Holdings, Inc. price-eps-surprise | M.D.C. Holdings, Inc. Quote
The consensus mark for revenues is pegged at $1.12 billion, suggesting a decline of 22.2% decline from the prior-year quarter’s reported figure.
Factors to Note
Revenues
MDC’s third-quarter revenues are likely to decline due to moderation in the housing demand, driven by higher mortgage rates and lower average selling prices. Also, the uncertain economic scenario as well as material cost and wage inflation have been impacting the U.S. housing market's affordability.
That said, the company's focus on the growing demand for entry-level homes and strategic initiatives are likely to have helped it partially offset the adverse effects of the aforementioned risks. Furthermore, the low supply of existing homes is likely to have sparked the demand for new homes, thus aiding the company’s growth.
For third-quarter 2023, MDC expects home deliveries to be within 1,850-2,000 units, down from 2,387 units delivered a year ago. Our model predicts deliveries to decline 20.8% year over year to 1,890 units.
MDC expects the average selling price or ASP for the quarter to be approximately $555,000 compared with $590,000 reported a year ago. The figure is in line with our model’s prediction.
Segment-wise, we expect the Homebuilding revenues to decrease 25.4% to $1.05 billion from $1.41 billion reported a year ago due to lower deliveries and ASP. Also, we anticipate the Financial Services revenues to decline 19.7% year over year to $27.4 million.
Margins
The bottom line of MDC is likely to be affected by the ongoing inflationary pressures, higher costs and softer revenues. The company anticipates housing gross margin (assuming no impairments or warranty adjustments) to be between 18% and 19%, compared with 24.7% reported in the prior-year period.
Our model predicts homebuilding gross margin (excluding inventory impairments) to be 18.8% for the quarter, down from the year-ago period’s levels.
Orders & Backlog
We expect new orders of MDC to increase 487.5% year over year to 1,757 units in the quarter. Our model predicts the ASP of new orders to increase 9.6% year over year to $560,000.
We anticipate the total backlog to decrease 45.4% to 2,915 units from 5,338 units reported a year ago. Moreover, we expect the ASP of the total backlog to decrease 2.8% year over year to $582,400.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for MDC for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: MDC has an Earnings ESP of -7.23%. You can uncover the best stocks before they’re reported with our Earnings ESP Filter.
Zacks Rank: MDC currently carries a Zacks Rank of 1.
Stocks Poised to Beat on Earnings
Here are some companies in the Zacks Construction sector, which according to our model, have the right combination of elements to post an earnings beat in the quarter to be reported.
KBR, Inc. KBR has an Earnings ESP of +6.36% and a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
KBR’s earnings for the to-be-reported quarter are expected to increase 12.3%. Notably, the company reported better-than-expected earnings in the trailing four quarters, the average surprise being 10.8%.
Louisiana-Pacific Corporation LPX has an Earnings ESP of +2.07% and a Zacks Rank of 3.
LPX is expected to register a 19.2% decline in earnings for the to-be-reported quarter. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the remaining one occasion, the average surprise being 95.8%.
Vulcan Materials Company VMC has an Earnings ESP of +0.48% and a Zacks Rank of 2.
VMC’s earnings for the to-be-reported quarter are expected to increase 24.7%. The company reported better-than-expected earnings in three of the trailing four quarters and missed on the other one occasion, the average surprise being 14%.
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Vulcan Materials Company (VMC) : Free Stock Analysis Report
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M.D.C. Holdings, Inc. (MDC) : Free Stock Analysis Report
