INCLINE VILLAGE, Nev. - Tri Pointe Homes , Inc. (NYSE: NYSE:TPH) reported a robust fourth quarter, with earnings surpassing Wall Street expectations despite a decline in revenue. The homebuilder announced a diluted earnings per share (EPS) of $1.36, exceeding analyst predictions of $1.18. However, revenue for the quarter dropped to $1.2 billion, a 17% decrease compared to the same period last year, yet still managed to slightly outdo the consensus estimate of $1.19 billion.
The company's net new home orders saw a significant surge of 143% to 1,078 units, while backlog units rose by 58% to 2,320, and the backlog dollar value increased by 38% to $1.6 billion. Despite these gains, the company's stock experienced a marginal decline of 0.70% following the earnings release, indicating investor concerns over the company's lower-than-expected guidance for 2024 home deliveries, which fell short of the Bloomberg consensus of 6,340 homes.
CEO Doug Bauer attributed the quarter's success to a combination of factors, including a 143% increase in net new home orders and a 14% rise in active selling communities. "The strong finish to the year was accompanied by a 143% increase in net new home orders for the quarter, which led to a 40% increase for the full year," said Bauer. He also noted the industry's rapid change in mortgage interest rates during the fourth quarter, which peaked above 8% in October before decreasing, leading to increased order activity that has continued into the new year.
Looking ahead, Tri Pointe Homes anticipates delivering between 1,200 and 1,400 homes in the first quarter of 2024, with an average sales price between $645,000 and $655,000. The company expects its homebuilding gross margin percentage to be in the range of 22.0% to 23.0% for the first quarter and anticipates its selling, general, and administrative (SG&A) expenses as a percentage of home sales revenue to be between 12.0% and 13.0%. For the full year of 2024, the company forecasts delivering between 6,000 and 6,300 homes, with a homebuilding gross margin percentage between 21.5% and 22.5%.
Despite the cautious outlook for home deliveries in 2024, Tri Pointe Homes remains optimistic about the housing market's fundamentals and its growth strategy, including expanding into new markets such as the Coastal Carolinas and Florida. "We believe our strong balance sheet positions us well to return capital to stockholders through share repurchases, while maintaining sufficient liquidity to expand our market scale and tap into new opportunities that fit within our growth strategy," concluded Bauer.
InvestingPro Insights
As Tri Pointe Homes, Inc. (NYSE: TPH) navigates a challenging housing market, real-time data and expert analysis from InvestingPro provide a deeper understanding of the company's financial health and stock performance. With a market capitalization of $3.36 billion, the company is trading at an attractive earnings multiple of 8.34, which is adjusted to 8.03 for the last twelve months as of Q3 2023. This low earnings multiple, an InvestingPro Tip, suggests that the stock may be undervalued relative to its earnings potential, offering a compelling opportunity for investors seeking value.
Another InvestingPro Tip points out that Tri Pointe Homes is expected to maintain a strong free cash flow yield, indicating its ability to generate cash and potentially fund future growth or return capital to shareholders. This is particularly relevant as the company looks to expand into new markets and manage its resources efficiently.
InvestingPro data highlights a slight revenue decline of 1.42% for the last twelve months as of Q3 2023, which may reflect the broader market trends impacting the homebuilding industry. Despite this, the company's stock has delivered a strong return over the last year, with a price total return of 55.99%. This performance underscores the company's resilience and the market's confidence in its strategic direction.
For investors seeking more in-depth analysis, InvestingPro offers additional insights on Tri Pointe Homes, with tips such as the company's valuation, earnings revisions, sales expectations, and stock price volatility. Discover more InvestingPro Tips for Tri Pointe Homes at https://www.investing.com/pro/TPH and take advantage of an extra 10% off a yearly or biyearly Pro and Pro+ subscription using the coupon code PRONEWS24. With a total of 14 InvestingPro Tips available, investors can gain a comprehensive view of the company's prospects and make informed decisions.
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