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The Zacks Analyst Blog Highlights: Beazer Homes USA, M/I Homes, TRI Pointe and Toll Brothers

·6 min read

For Immediate Release

Chicago, IL – December 11, 2020 – Zacks.com announces the list of stocks featured in the Analyst Blog. Every day the Zacks Equity Research analysts discuss the latest news and events impacting stocks and the financial markets. Stocks recently featured in the blog include: Beazer Homes USA, Inc. BZH, M/I Homes, Inc. MHO, TRI Pointe Group, Inc. TPH and Toll Brothers Inc. TOL.

Here are highlights from Thursday’s Analyst Blog:

Mortgage Rate Hits Record Low Again: 4 Homebuilders to Tap

The U.S. economy has been battered by the coronavirus but the housing market remains unruffled. High demand for new and existing homes has been driving prices higher over the past few months since the economy started reopening.

Homebuilder confidence is on a record high and people are flocking to the markets to buy home. The key factor behind this buying spree is record-low mortgage rate. Mortgage rates fell to yet another record low last week, indicating that it is going to help the homebuilding market further.

Mortgage Rate Hits Another Record Low

Last week, mortgage rates fell to the 14th record low in 2020. According to the Mortgage Bankers Association (MBA), the average 30-year-fixed mortgage rate with confirming balances fell to 2.90% from 2.92%. This is the lowest since the MBA started conducting the survey.

Moreover, mortgage applications for reapplication jumped 2% last week from the week earlier, up a whopping 89% from last year. No doubt the historically-low mortgage rate has been a boon to the housing market, especially when the other industries have been jolted by the pandemic.

Boom Time for Housing Market

Higher demand for homes has resulted in a shortage of supply, which is further inflating prices. However, buyers don’t seem to be shelling out the extra bucks given the low mortgage rates.

According to a report from the Federal Housing Finance Agency, U.S. home prices jumped a record 3.1% in the third quarter from the prior quarter and 7.8% rise from the year-ago level.

Besides, homebuilder confidence is on an all-time high. According to the National Association of Home Builders’ Wells Fargo Housing Market Index, homebuilder confidence for single-family homes hit a record high in November, with the index reading 90. It was the third consecutive month when homebuilder sentiment hit a new high. The index read 71 in the year-earlier period.

Moreover, demand for new and existing homes at this time is generally unusual but this year has been completely different. With mortgage expected to remain low, it is likely that the homebuilding market will benefit in the near term as increasing demand coupled with a shortage in supply will continue to push prices up.

Our Choices

Record low mortgage rate is helping to boost home prices, which is making people rush to buy homes. This has been the reason behind the jump in mortgage applications also. Moreover, a jump in new and existing homes sales is an indication that buyers are showing confidence in the economy. In this opportune time to invest in homebuilding, we suggest four stocks with a Zacks Rank #1 (Strong Buy) or 2 (Buy) that are likely to gain ahead. You can see the complete list of today’s Zacks #1 Rank stocks here.

Beazer Homes USA designs, builds and sells single-family homes. The company designs homes to appeal primarily to entry-level and first move-up home buyers. 

The company’s expected earnings growth rate for the current year is 2.1%. The Zacks Consensus Estimate for current-year earnings has improved 20.6% over the past 60 days. The company sports a Zacks Rank #1.

MI Homes is one of the nation's leading builders of single-family homes. M/I Homes serves a broad segment of the housing market, including first-time, move-up, luxury and empty-nester buyers. 

The company’s expected earnings growth rate for the current year is 82.3%. The Zacks Consensus Estimate for current-year earnings has improved 33.3% over the past 60 days. The company has a Zacks Rank #2.

TRI Pointe Group is involved in the design, construction and sale of single-family homes. The company's operating portfolio includes Maracay Homes in Arizona; Pardee Homes in California and Nevada; Quadrant Homes in Washington; Trendmaker Homes in Texas; TRI Pointe Homes in California and Colorado; and Winchester Homes in Maryland and Virginia.

The company’s expected earnings growth rate for the current year is 27.9%. The Zacks Consensus Estimate for current-year earnings has improved 22.1% over the past 60 days. The company sports a Zacks Rank #1.

Toll Brothers builds single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves.

The company’s expected earnings growth rate for next year is 39.4%. The Zacks Consensus Estimate for current-year earnings has improved 1.7% over the past 60 days. The company carries a Zacks Rank #2.

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Past performance is no guarantee of future results. Inherent in any investment is the potential for loss. This material is being provided for informational purposes only and nothing herein constitutes investment, legal, accounting or tax advice, or a recommendation to buy, sell or hold a security. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. It should not be assumed that any investments in securities, companies, sectors or markets identified and described were or will be profitable. All information is current as of the date of herein and is subject to change without notice. Any views or opinions expressed may not reflect those of the firm as a whole. Zacks Investment Research does not engage in investment banking, market making or asset management activities of any securities. These returns are from hypothetical portfolios consisting of stocks with Zacks Rank = 1 that were rebalanced monthly with zero transaction costs. These are not the returns of actual portfolios of stocks. The S&P 500 is an unmanaged index. Visit https://www.zacks.com/performance for information about the performance numbers displayed in this press release.

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Toll Brothers Inc. (TOL) : Free Stock Analysis Report
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Beazer Homes USA, Inc. (BZH) : Free Stock Analysis Report
MI Homes, Inc. (MHO) : Free Stock Analysis Report
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