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Homebuilder Rally Builds Up DR Horton

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By Zacks.com, Contributor

Did you miss the homebuilder rally last year? It’s not too late. DR Horton (DHI) is a Zacks Rank #1 (Strong Buy) that is expected to grow earnings by 30% in 2013. DR Horton is one of the largest homebuilders in the United States with operations in 77 markets in 26 states. Its homes are priced from $100,000 to $600,000. The housing market has been recovering in 2013 but having been burned during the peak of the boom, the homebuilders have been more conservative about rolling out new product. At the end of Fiscal 2012, DR Horton’s backlog had risen 49.2%. Special Offer: We asked some of the most successful investors in the country to name their #1 pick for 2013. Get details on their top 10 stocks in this free report, Forbes Top Stocks for 2013…10 to Buy Now. Low Inventory Equals Higher Prices Interestingly, DR Horton finds itself in competition not so much with other homebuilders but with existing home sellers. That’s where the good news comes in. Inventories of existing homes have been plummeting the last few months. For instance, Las Vegas saw inventories fall 24% in March year-over-year. If you count only the houses that are not already under contract, the existing home inventory actually plunged 42% to less than a month’s supply. When there is less than 6-month inventory that means it is a sellers market. With just 1-month worth of inventory that puts it in an extreme sellers market. In a sellers market, buyers are faced with limited options so they will turn to new construction. That’s good news for DR Horton. Increased demand but limited inventory means it can raise prices. The analysts are even more bullish on DR Horton now than 3 months ago as the Zacks Consensus for fiscal 2013 has jumped to $1.01 from 88 cents in that time. That is earnings growth of 30% over 2012. 2014 is still seen as equally bullish with another 42% earnings growth expected. But What About Valuations? There has been a lot of complaining that the homebuilder stocks have gotten ahead of themselves and are now overvalued. But that’s simply not the reality. DR Horton has a forward P/E of 23.1 which is slightly higher than its peers which average a P/E of 21.6. Historically, DR Horton traded as high as 26x in 2007, just before the crash. In 2011, when the company struggled to find earnings, it traded as high as 97x. Even last year, as the housing market picked up, its forward P/E was as high as 29. Compared to its recent history, DR Horton’s valuation isn’t excessive. The rising earnings estimate is also keeping its P/E in check. It’s not too late to make money in the homebuilders. Many are still expected to see big earnings growth this year. DR Horton is a company that should be front and center for those looking for a way to play the improving housing market. Tracey Ryniec is the value stock strategist for Zacks.com. She

Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

Push Toward Homebuilding Builds Up NVR Shares

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By Zacks.com, Contributor

The homebuilders were hot in 2012 and it looks to continue in 2013 as the housing market recovers. NVR (NVR) is one that you don’t hear about as much as the big housing names like Pulte and Lennar. But this Zacks Rank #1 (Strong Buy) is expected to grow earnings by the double digits in both 2013 and 2014. NVR might not be familiar but its homebuilding segments probably are. It is a holding company that operates Ryan Homes, NVHomes, Fox Ridge Homes and Heartland Homes in 15 states. It also operates NVR Mortgage out of Virginia. It’s best known for Ryan Homes, which was founded in 1948 in the post-World War II boom and has built 365,000 single family homes, townhouses and condos across the country. On Jan. 24, NVR reported fourth quarter results and confirmed just how good the housing recovery really is. These are the kind of numbers you want to see out of the homebuilders right now. This recovery is no fluke.  Fourth quarter revenue jumped 27% to $943 million. New orders rose 22% to 2,625 units. The backlog also climbed by 35% to 4979 units. Not surprisingly, it was dark days following the Great Recession of 2008 and 2009. In 2010, the company managed to grow earnings by 7.7% but then they fell 30% in 2011. 2012 marked the start of a the earnings turnaround, however. Earnings grew 51% in 2012 and are expected to grow another 51% in 2013 and 39% in 2014. Special Offer: We asked some of the most successful investors in the country to name their #1 pick for 2013. Get details on their top 10 stocks in this free report, Forbes Top Stocks for 2013…10 to Buy Now. Share Price Over $1,000 No, you’re not reading that wrong. NVR trades with a share price above $1,000. But don’t let that stop you from considering the stock. Google trades above $800 and Priceline is right around $700. Share price isn’t indicative of value (or lack thereof.) There’s no doubt some of the homebuilders have ridden too far, too fast. Check out NVR‘s 2 year chart. The industry has a collective P/E of 139. That’s not exactly cheap. But NVR has attractive valuations, comparatively. It has a forward P/E of just 19.9 and a price-to-book ratio of 3.5. There is a lot of good news in the housing market right now. The industry is ranked 21 out of 265 by Zacks. NVR, however, is the only company out of 16 in the residential/commercial building industry with a Zacks Rank #1 (Strong Buy). It is scheduled to report first quarter results on April 18. It has surprised 3 out of the last 4 quarters so it’s earnings surprise track record has been improving as well. If you’re looking for a leader in housing, NVR is it. Tracey Ryniec is the value stock strategist for Zacks.com. She is also the editor of the Turnaround Trader and Value Investor services. You can follow her on twitter …read more
Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

As Global M&A Activities Bounce Back, So Does Evercore

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By Zacks.com, Contributor

One of the most interesting debates I’ve heard lately about this market is whether or not the increase in M&A activity is bullish. The bearish Doug Kass says it’s not and the ever-eBULLient Jim Cramer says it is. I’m not sure who is right. But I’ll tell you what is right: putting money on the focused, experienced deal-makers at Evercore Partners (EVR). This “boutique” investment bank—I’ve always loved that phrase, like it’s a shop on Fifth Avenue for the 1% (which it is I guess)—was founded in 1996 by current Chairman Roger Altman, a veteran of Wall Street and Washington. Altman served as deputy secretary of the U.S. Treasury in the late 1970s and again in the ’90s and was head of M&A for Blackstone Group (BX) before launching his own firm on the premise that clients would be best served by an investment banking firm free of the conflicts of interest inherent to large, multi-product financial institutions. Kill the Traders and Other Distractions Altman believed that this pure advisory model, not distracted by proprietary trading and sell-side research, would serve clients the best and attract the most talented senior finance professionals to the firm. This is important because while M&A deals seem like quick cash grabs on the surface where big money simply has to make a deal that makes both sides richer, there is a lot more to Evercore’s business, including advising on divestitures, restructurings, specialized financings, public offerings, private placements and other strategic transactions. Special Offer: We asked some of the most successful investors in the country to name their #1 pick for 2013. Get details on their top 10 stocks in this free report, Forbes Top Stocks for 2013…10 to Buy Now. Though global M&A activity rebounded fairly strong in 2010 and 2011 after the financial crisis, Evercore was a slow starter. You can see from the Price & Consensus chart below that earnings estimates would start out rosy for each year 2010 through 2012, only to be taken down. And, of course, the stock price followed. But in late 2012, you can also see that story quickly began to change. Analyst consensus estimates made a dramatic turnaround on the heels of one of the company’s biggest deals ever, advising Kraft Foods on its $36 billion spin-off of Kraft Foods Group. And as corporate deal-making heated up in into the end of 2012, with average Wall Street deal premiums crossing 25%, profit projections for EVR got hotter too. In early December, they signed on to advise McMoRan Exploration in its interest to be acquired by Freeport-McMoRan Copper & Gold (FCX) for $3.2 billion. Evercore has now facilitated more than $1 trillion in transactions, including advising a special committee of Dell’s board of directors in the recent bid to take the company private. And one thing to remember about Evercore is that even if a deal doesn’t close, they still get paid advisory fees for their work. The firm also has a growing Investment Management Services division …read more
Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

Avery Dennison Turns Triple Play, Stock Tagging Fresh Highs

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By Zacks.com, Contributor

Avery Dennison completed a triple play in the fourth quarter: a positive earnings surprise, a positive sales surprise, and strong management guidance. This prompted analysts to revise their estimates higher for both 2013 and 2014, sending the stock to a Zacks Rank #1 (Strong Buy) stock. Although shares have risen more than 10% off the strong quarter, valuations still look very reasonable. So shares of Avery Dennison have plenty of room to continue marching higher. Avery Dennison manufactures labeling and packaging materials for a wide variety of industries around the globe. It reports its results in three segments: -Pressure-sensitive Materials: 71% of total sales -Retail Branding & Information Solutions: 25% -Other Specialty Converting Businesses: 4% Pressure-sensitive materials consist primarily of papers, plastic films, metal foils and fabrics, which are coated with special adhesives, and then laminated with specially coated backing papers and films. These label and packaging materials are sold worldwide to label printers and converters for labeling, decorating, fastening, electronic data processing and special applications in the home and personal care, beer and beverage, durables, pharmaceutical, wine and spirits, and food market segments. The Retail Branding & Information Solutions segment makes a wide variety of brand identification and information management products for retailers, apparel manufacturers, distributors and industrial customers around the globe. Its brand identification products include woven and printed labels, graphic tags and barcode tags, and its information management products include price tickets, carton labels, RFID tags and printing applications. Avery Dennison was founded in 1935 and is headquartered in Pasadena, California. It has a market cap of $4.0 billion. Special Offer: We asked some of the most successful investors in the country to name their #1 pick for 2013. Get details on their top 10 stocks in this free report, Forbes Top Stocks for 2013…10 to Buy Now. Solid Fourth Quarter Results Avery Dennison delivered better-than-expected Q4 results on January 30. Earnings per share came in at 54 cents, well ahead of the Zacks Consensus Estimate of 49 cents. It was a 50% increase over the same quarter in 2011. Net sales rose 5% to $1.532 billion, beating the Zacks Consensus Estimate of $1.486 billion. Organic sales growth was even better at 7%. The Pressure-sensitive Materials segment saw organic top-line growth of 6% while sales in Retail Branding & Information Solutions jumped 10%, driven by increased demand from U.S. and European retailers and brands, including accelerating RFID adoption. Meanwhile, the adjusted operating margin expanded 170 basis points to 6.6%. Bullish Guidance Following strong Q4 results, management provided encouraging guidance for 2013. The company expects adjusted EPS from continuing operations of $2.40 to $2.80 in 2013, which prompted analysts to revise their estimates higher. The ZacksConsensus Estimate for 2013 is now $2.57, up from $2.45 before the Q4 release. This represents 23% growth over 2012 EPS. The 2014 consensus increased too, rising 15 cents to $2.86. This corresponds with 12% annual EPS growth. It is a Zacks Rank #1 (Strong Buy) stock. Valuation Shares of AVY are up …read more
Source: FULL ARTICLE at Forbes Latest

News, Politics, Government

Mellanox Technologies Stumbles In The Fourth Quarter

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By Zacks.com, Contributor Mellanox Technologies (MLNX) delivered mixed fourth quarter results on January 23. Revenue was mostly in line with expectations, but earnings per share fell well short of the Zacks Consensus Estimate. The company’s first quarter revenue guidance was also significantly below consensus, prompting a flurry of negative estimate revisions from analysts. It is a Zacks Rank #5 (Strong Sell). Mellanox supplies end-to-end InfiniBand and Ethernet interconnect solutions and services for servers and storage. Fourth quarter revenues surged 68% to $122 million, ahead of the consensus of $120 million. However, the gross profit margin declined 50 basis points quarter-over-quarter to 70.0%. Earnings per share came in at 47 cents, missing the Zacks Consensus Estimate of 55 cents. Special Offer: We asked some of the most successful investors in the country to name their #1 pick for 2013. Get details on their top 10 stocks in this free report, Forbes Top Stocks for 2013…10 to Buy Now. On the conference call, management provided weak first quarter revenue guidance, and analysts unanimously cut their estimates for both 2013 and 2014. The 2013 Zacks Consensus Estimate is now $1.43, down from $3.27 before the report. And the 2014 consensus slid from $4.39 to $2.35. It is a Zacks Rank #5 (Strong Sell). In addition to negative earnings momentum, shares look pricey too. Mellanox now trades at a frothy 36x 12-month forward earnings, well ahead of the industry median of 23x. The stock also carries a long-term ‘Underperform’ Zacks Recommendation. MLNX data by YCharts Todd Bunton is the growth & income stock strategist for Zacks Investment Research and editor of the Income Plus Investor service.
Source: FULL ARTICLE at Forbes Latest