Wrapping up Q3 earnings, we look at the numbers and key takeaways for the home builders stocks, including Installed Building Products (NYSE:IBP) and its peers.
Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.
The 11 home builders stocks we track reported a mixed Q3. As a group, revenues beat analysts’ consensus estimates by 2.8% while next quarter’s revenue guidance was in line.
While some home builders stocks have fared somewhat better than others, they have collectively declined. On average, share prices are down 3.5% since the latest earnings results.
Installed Building Products (NYSE:IBP)
Founded in 1977, Installed Building Products (NYSE:IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.
Installed Building Products reported revenues of $778.2 million, up 2.3% year on year. This print exceeded analysts’ expectations by 4%. Overall, it was a stunning quarter for the company with an impressive beat of analysts’ EBITDA estimates.
“With another quarter of record financial performance, so far, 2025 has been an encouraging year for IBP. Our branches continue to execute at a high level, delivering reliable installation services to homebuilders of all sizes. While local market dynamics can vary greatly across the country, our results highlight the benefit of IBP’s scale, product and end-market diversity, a focus on service, and the trust we place in all of our branches to make the right decisions for their local markets,” stated Jeff Edwards, Chairman and Chief Executive Officer.
Interestingly, the stock is up 3.2% since reporting and currently trades at $245.53.
Is now the time to buy Installed Building Products? Access our full analysis of the earnings results here, it’s free for active Edge members.
Best Q3: Champion Homes (NYSE:SKY)
Founded in 1951, Champion Homes (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.
Champion Homes reported revenues of $684.4 million, up 11% year on year, outperforming analysts’ expectations by 6.9%. The business had an incredible quarter with a solid beat of analysts’ EBITDA estimates.
Champion Homes achieved the fastest revenue growth among its peers. The market seems happy with the results as the stock is up 15.6% since reporting. It currently trades at $76.89.
Is now the time to buy Champion Homes? Access our full analysis of the earnings results here, it’s free for active Edge members.
Weakest Q3: Meritage Homes (NYSE:MTH)
Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE:MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.
Meritage Homes reported revenues of $1.42 billion, down 10.8% year on year, falling short of analysts’ expectations by 3.4%. It was a disappointing quarter as it posted a significant miss of analysts’ revenue and adjusted operating income estimates.
Meritage Homes delivered the weakest performance against analyst estimates in the group. As expected, the stock is down 7.9% since the results and currently trades at $65.43.
Read our full analysis of Meritage Homes’s results here.
KB Home (NYSE:KBH)
The first homebuilder to be listed on the NYSE, KB Home (NYSE:KB) is a homebuilding company targeting the first-time home buyer and move-up buyer markets.
KB Home reported revenues of $1.62 billion, down 7.5% year on year. This print topped analysts’ expectations by 1.2%. Zooming out, it was a slower quarter as it produced a significant miss of analysts’ EBITDA and backlog estimates.
KB Home had the weakest full-year guidance update among its peers. The stock is down 7.6% since reporting and currently trades at $58.42.
Read our full, actionable report on KB Home here, it’s free for active Edge members.
Taylor Morrison Home (NYSE:TMHC)
Named “America’s Most Trusted Home Builder” in 2019, Taylor Morrison Home (NYSE:TMHC) builds single family homes and communities across the United States.
Taylor Morrison Home reported revenues of $2.10 billion, down 1.2% year on year. This result beat analysts’ expectations by 3.4%. It was a strong quarter as it also recorded an impressive beat of analysts’ EBITDA estimates and a solid beat of analysts’ adjusted operating income estimates.
The stock is down 7.3% since reporting and currently trades at $58.06.
Read our full, actionable report on Taylor Morrison Home here, it’s free for active Edge members.
Market Update
As a result of the Fed’s rate hikes in 2022 and 2023, inflation has come down from frothy levels post-pandemic. The general rise in the price of goods and services is trending towards the Fed’s 2% goal as of late, which is good news. The higher rates that fought inflation also didn't slow economic activity enough to catalyze a recession. So far, soft landing. This, combined with recent rate cuts (half a percent in September 2024 and a quarter percent in November 2024) have led to strong stock market performance in 2024. The icing on the cake for 2024 returns was Donald Trump’s victory in the U.S. Presidential Election in early November, sending major indices to all-time highs in the week following the election. Still, debates around the health of the economy and the impact of potential tariffs and corporate tax cuts remain, leaving much uncertainty around 2025.
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