Ticonderoga on Homebuilding and Building Products: February Starts & Permits – Headline Results Miss, But Poor Weather Was Likely The Culprit
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Price: $20.76 -3.4%
Rating Summary:
11 Buy, 10 Hold, 1 Sell
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Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
Rating Summary:
11 Buy, 10 Hold, 1 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 12 | Down: 19 | New: 22
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Ticonderoga on Homebuilding and Building Products: February Starts & Permits – Headline Results Miss, But Poor Weather Was Likely The Culprit by Stephen East
Ticonderoga analyst said, "While the builder equities have sold off on the poor Starts and Permits data this morning, we believe the market SHOULD take the metrics with a grain of salt because of the horrible weather in February across much of the U.S., making the data somewhat suspect. It is hard to underestimate the impact of weather on Starts. Further, when the upwardly revised Jan numbers are averaged in, we are above 550K YTD. It will take another month's data to see if Feb was an aberration. Our gut says it is. On Permits, investors should also discount the result, as we've already documented the lower buyer traffic due to weather. If buyers are not out, the builders won't take out permits. While today’s data is certainly disappointing, we do not believe it is a basis to discount the entire spring selling season. We will wait another month or two before calling a trend."
"Starts declined 22.5% to 479K, missing the consensus estimate of 566K. Given poor weather, we believed Starts were at risk of missing expectations. A slight positive, we note that January Starts were revised up to 618K from 596K. On an apples-to-apples basis, the decline improved slightly to down 19.6%. Single-Family Starts dropped 11.8% to 375K and are now back to levels not seen since the spring of 2009. Regionally, Single-Family Starts in the important South improved 8K or 3.9%, but results were more than offset by a 24K or 25.5% drop in the West to 70K."
"Permits declined 8.2% to 517K. The consensus was looking for 570K. We note Single-Family Permits did not fare any better than the overall result, with the metric dropping 9.3% to 382K. All regions were in negative territory for both Total and Single-Family Permits, with the decline in Single-Family led by a 21.6% decline in the Northeast and a 14.4% drop in the West."
"We note, Single-Family completed homes moved up 11% to 468K, implying more inventory on the ground. Completed Single-Family homes increased 16.8% in the South and 17.1% in the West, with the Northeast and Midwest both relatively flat. Given that the New Home market is entering the prime selling season, this increase does not trouble us at this point."
Stocks of note include: PulteGroup (NYSE: PHM), Ryland (NYSE: RYL), Lennar (NYSE: LEN), MDC Holdings (NYSE: MDC), KB Home (NYSE: KBH), DR Horton (NYSE: DRH), Hovnanian (NYSE: HOV), and Beazer (NYSE: BZH)
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Ticonderoga analyst said, "While the builder equities have sold off on the poor Starts and Permits data this morning, we believe the market SHOULD take the metrics with a grain of salt because of the horrible weather in February across much of the U.S., making the data somewhat suspect. It is hard to underestimate the impact of weather on Starts. Further, when the upwardly revised Jan numbers are averaged in, we are above 550K YTD. It will take another month's data to see if Feb was an aberration. Our gut says it is. On Permits, investors should also discount the result, as we've already documented the lower buyer traffic due to weather. If buyers are not out, the builders won't take out permits. While today’s data is certainly disappointing, we do not believe it is a basis to discount the entire spring selling season. We will wait another month or two before calling a trend."
"Starts declined 22.5% to 479K, missing the consensus estimate of 566K. Given poor weather, we believed Starts were at risk of missing expectations. A slight positive, we note that January Starts were revised up to 618K from 596K. On an apples-to-apples basis, the decline improved slightly to down 19.6%. Single-Family Starts dropped 11.8% to 375K and are now back to levels not seen since the spring of 2009. Regionally, Single-Family Starts in the important South improved 8K or 3.9%, but results were more than offset by a 24K or 25.5% drop in the West to 70K."
"Permits declined 8.2% to 517K. The consensus was looking for 570K. We note Single-Family Permits did not fare any better than the overall result, with the metric dropping 9.3% to 382K. All regions were in negative territory for both Total and Single-Family Permits, with the decline in Single-Family led by a 21.6% decline in the Northeast and a 14.4% drop in the West."
"We note, Single-Family completed homes moved up 11% to 468K, implying more inventory on the ground. Completed Single-Family homes increased 16.8% in the South and 17.1% in the West, with the Northeast and Midwest both relatively flat. Given that the New Home market is entering the prime selling season, this increase does not trouble us at this point."
Stocks of note include: PulteGroup (NYSE: PHM), Ryland (NYSE: RYL), Lennar (NYSE: LEN), MDC Holdings (NYSE: MDC), KB Home (NYSE: KBH), DR Horton (NYSE: DRH), Hovnanian (NYSE: HOV), and Beazer (NYSE: BZH)
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