Industry Overview - The housing sector is facing challenges due to high interest rates and the lock-in effect of low mortgage rates from the pandemic, leading to existing home sales around 4 million, which is approximately 30% lower than pre-pandemic levels [1][2] - There is a significant housing shortage in the U.S., with estimates indicating a deficit of 3.8 million homes, which would take homebuilders about 7.5 years to address [2] Company Analysis: Williams-Sonoma - Williams-Sonoma operates in the housing market through its high-end home furnishings brands, including West Elm and Pottery Barn [5] - The company has maintained strong profit margins and controlled costs through effective inventory management and store rationalization, even in a sluggish market [6] - It has a history of returning capital to shareholders, recently raising its dividend by 16% to $0.66 per share, marking the 16th consecutive year of dividend increases [7] - The company has reduced its shares outstanding by about 20% over the last five years and reported a record Q4 operating margin of 21.5% with comparable sales growth of 3.1% [8] - Williams-Sonoma is well-regarded for its brand portfolio, management, and attractive valuation with a price-to-earnings ratio under 18, positioning it well for future demand recovery [9] Company Analysis: Green Brick Partners - Green Brick Partners has seen a 600% increase in stock value over the last five years, benefiting from low inventory of existing homes that has created demand for new homes [10] - The company differentiates itself by owning significant land and focusing on high-growth markets like Texas, Florida, and Georgia, which helps achieve better margins [11] - Green Brick reported an 18.1% revenue increase to $2.1 billion last year, with earnings per share rising 38% to $8.45 [12] - The stock is trading at a price-to-earnings ratio of less than 7, indicating it may be undervalued despite macroeconomic risks [12]

Core Insights - The article emphasizes the importance of value investing as a preferred strategy for identifying strong stocks in various market conditions [2] - Green Brick Partners (GRBK) is highlighted as a notable value stock, currently holding a Zacks Rank of 2 (Buy) and an A for Value [3][6] Valuation Metrics - The Price-to-Sales (P/S) ratio for GRBK is 1.2, significantly lower than the industry average of 1.85, indicating potential undervaluation [4] - GRBK's Price-to-Cash Flow (P/CF) ratio stands at 6.43, compared to the industry's average of 22.75, further suggesting that the stock may be undervalued based on its cash flow outlook [5] Earnings Outlook - The strong earnings outlook for GRBK, combined with its favorable valuation metrics, positions it as an impressive value stock at the moment [6]

The Zacks Real Estate – Development industry constituents are likely to face challenges due to geopolitical unrest and macroeconomic uncertainty. These factors are projected to increase material expenses and maintain high real estate prices. Until macroeconomic conditions improve, sales activity is likely to remain subdued in the near future.However, healthy demand for a number of real estate property types and a slowdown in the pace of new deliveries are likely to provide the industry some support, placing ...

Core Viewpoint - Green Brick Partners (GRBK) has been upgraded to a Zacks Rank 2 (Buy), indicating a positive outlook based on rising earnings estimates, which significantly influence stock prices [1][3]. Earnings Estimates and Stock Price Impact - The Zacks rating system emphasizes the importance of changing earnings estimates, which are strongly correlated with near-term stock price movements [4][6]. - Institutional investors often adjust their valuations based on earnings estimates, leading to significant stock price movements when they buy or sell large quantities [4]. Company Performance Indicators - Green Brick Partners is projected to earn $8.61 per share for the fiscal year ending December 2025, reflecting a year-over-year increase of 1.9% [8]. - Over the past three months, the Zacks Consensus Estimate for Green Brick Partners has risen by 2.6%, indicating a positive trend in earnings expectations [8]. Zacks Rating System Overview - The Zacks Rank system classifies stocks into five groups based on earnings estimates, with a strong historical performance, particularly for Zacks Rank 1 stocks, which have averaged a +25% annual return since 1988 [7]. - The upgrade of Green Brick Partners to a Zacks Rank 2 places it in the top 20% of Zacks-covered stocks, suggesting potential for market-beating returns in the near term [10].

Green Brick Partners (GRBK) Q4 2024 Earnings Call February 27, 2025 08:47 PM ET Company Participants Richard Costello - CFO, Treasurer & SecretaryJames Brickman - Co-Founder, CEO & DirectorJed Dolson - President & COOCarl Reichardt - Managing Director - Equity Research Operator Thank you for standing by. My name is Janine, and I will be your lead operator for today. At this time, I would like to welcome everyone to the Green Brick Partners Inc. Fourth Quarter twenty twenty four Earnings Call. All lines have ...

Green Brick Partners, Inc. (NYSE:GRBK) Q4 2024 Earnings Conference Call February 27, 2025 ET Company Participants Rick Costello - CFO Jim Brickman - Co-Founder and CEO Jed Dolson - President and COO Conference Call Participants Carl Reichardt - BTIG Operator Thank you for standing by. My name is Janine, and I will be your lead operator for today. At this time, I would like to welcome everyone to the Green Brick Partners, Inc. Fourth Quarter 2024 Earnings Call. All lines have been placed on mute to prevent a ...

Financial Data and Key Metrics Changes - The company reported record fourth quarter and full year 2024 results, with home closing revenue increasing by 24% year-over-year to $557 million [7][22] - Net income attributable to Green Brick grew 42% year-over-year to $104 million, and diluted EPS increased 46% year-over-year to $2.31, both records for any fourth quarter in the company's history [8][25] - For the full year, net income attributable to Green Brick increased 34.1% year-over-year to $382 million, and diluted EPS grew 37.6% over 2023 to $8.45, the highest in company history [26] Business Line Data and Key Metrics Changes - Home closings grew almost sixfold from 665 units in 2015 to 3,783 in 2024, generating home closing revenues that exceeded $2 billion for the first time [10] - Homebuilding gross margins improved from 20.6% in 2015 to 33.8% in 2024, representing a 64% improvement [10] - Trophy brand represented 51% of total closings in Q4 2024, with an average selling price (ASP) below the company average [23] Market Data and Key Metrics Changes - Net new home orders during the fourth quarter grew 29.3% year-over-year to 878, one of the highest growth rates among public homebuilders [27] - The DFW housing market continued to perform well, with Trophy contributing 54% of net new orders by volume [32] - The company has a strong land position, with total lots owned and controlled increasing by 32% to over 37,800 lots [38] Company Strategy and Development Direction - The company focuses on infill and infill adjacent submarkets where supply is constrained and competition is limited, which has driven its success [15] - The company plans to increase its spend on land development by 46% to approximately $300 million in 2025 [37] - A new share repurchase plan has been authorized to buy back up to $100 million of common shares, indicating a commitment to maximizing shareholder value [40] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about long-term housing demand despite challenges posed by elevated mortgage rates, expecting significant demand from millennials and Gen Z entering their prime home buying years [19][20] - The company anticipates that the housing market remains undersupplied by an estimated 4 million to 7 million units [20] - Management expressed confidence in their ability to adjust home prices and incentives as needed due to industry-leading gross margins [36] Other Important Information - The company has maintained a low debt to total capital ratio of 17.2% at the end of 2024, the lowest year-end level since 2015 [12][30] - 93% of outstanding debt is fixed rate with an interest rate of 3.3% [31] Q&A Session Summary Question: Trends in January and February regarding sales and incentives - Management noted that sales trends in January and February are similar to the previous year, with mortgage rates dropping in February leading to a decrease in incentives [49][51] Question: Breakdown of the 46% increase in development spend - Management explained that the increase in land development spend is due to prior investments in land, which are now coming to fruition, and that community count growth is expected in the near future [54][58] Question: Expectations for SG&A leverage in 2025 - Management indicated that while there may be modest increases in headcount, the efficiency of the Trophy brand will help improve SG&A as a percentage of revenue over time [62][64]

Core Insights - Green Brick Partners (GRBK) reported revenue of $567.31 million for the quarter ended December 2024, reflecting a 26% increase year-over-year, although it fell short of the Zacks Consensus Estimate by 4.25% [1] - The company's EPS for the quarter was $2.31, up from $1.58 in the same quarter last year, surpassing the consensus EPS estimate of $2.24 by 3.12% [1] Financial Performance Metrics - Net new home orders totaled 878, exceeding the average estimate of 807 from two analysts [4] - New homes delivered were 1,019, slightly below the estimated 1,028 [4] - Backlog units stood at 668, surpassing the average estimate of 588 [4] - Active selling communities at the end of the period numbered 106, just below the estimated 108 [4] - Land and lots revenue was reported at $10.46 million, significantly higher than the estimated $3.50 million, marking a 463.2% increase year-over-year [4] - Residential units revenue reached $556.86 million, slightly below the estimated $562.77 million, but still representing a 24.2% year-over-year increase [4] Stock Performance - Over the past month, shares of Green Brick Partners have returned -2.8%, compared to a -2.3% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Group 1 - Green Brick Partners reported quarterly earnings of $2.31 per share, exceeding the Zacks Consensus Estimate of $2.24 per share, and showing an increase from $1.58 per share a year ago, representing an earnings surprise of 3.12% [1] - The company posted revenues of $567.31 million for the quarter ended December 2024, which was 4.25% below the Zacks Consensus Estimate, compared to $450.38 million in revenues a year ago [2] - Green Brick Partners has surpassed consensus EPS estimates three times over the last four quarters and topped consensus revenue estimates two times during the same period [2] Group 2 - The stock has gained approximately 6% since the beginning of the year, outperforming the S&P 500's gain of 1.3% [3] - The company's earnings outlook is crucial for investors, as it includes current consensus earnings expectations for upcoming quarters and any recent changes to those expectations [4] - The current consensus EPS estimate for the upcoming quarter is $1.60 on revenues of $463.4 million, and for the current fiscal year, it is $8.53 on revenues of $2.26 billion [7] Group 3 - The Real Estate - Development industry, to which Green Brick Partners belongs, is currently ranked in the bottom 32% of over 250 Zacks industries, indicating potential challenges for stock performance [8] - The estimate revisions trend for Green Brick Partners is mixed, resulting in a Zacks Rank 3 (Hold), suggesting the stock is expected to perform in line with the market in the near future [6]

Home Deliveries and Sales - Home deliveries increased by 21.1% to 3,783 units, while home closings revenue rose by 17.1% to $2,069,756,000 compared to the previous year[147] - Average sales price of homes delivered decreased by 3.4% to $547,100 due to product mix and high mortgage rates[147] - Net new home orders increased by 9.7% to 3,681, with revenue from these orders rising by 2.9% to $2,010,439,000[151] - Backlog revenue decreased by 10.7% to $495,883,000, driven by a 13.2% decrease in backlog units[153] Financial Performance - Total revenues for 2024 reached $2,098,943, a 18.1% increase from $1,777,710 in 2023[228] - Net income attributable to Green Brick Partners, Inc. for 2024 was $381,583, representing a 34.1% increase compared to $284,626 in 2023[228] - Gross profit for 2024 was $703,521, up 28.3% from $548,182 in 2023[228] - Basic earnings per share increased to $8.51 in 2024, compared to $6.20 in 2023, reflecting a 37.2% growth[228] - The company reported a total gross profit margin of approximately 33.5% for 2024, compared to 30.8% in 2023[228] Assets and Liabilities - Total assets as of December 31, 2024, were $2,249,994, a 18.2% increase from $1,902,832 in 2023[225] - Total liabilities remained relatively stable at $551,831 in 2024, compared to $548,684 in 2023[225] - The company’s investments in unconsolidated entities decreased to $60,582 in 2024 from $84,654 in 2023, a reduction of 28.5%[225] - The company’s total liabilities for unconsolidated entities decreased to $30,843,000 in 2024 from $67,117,000 in 2023, a decline of 54.0%[340] Cash Flow and Capital Structure - Unrestricted cash and cash equivalents decreased to $141.5 million in 2024 from $179.8 million in 2023[171] - Net cash provided by operating activities significantly dropped to $25.9 million in 2024, compared to $213.3 million in 2023[180] - Cash and cash equivalents decreased to $141,543 in 2024 from $179,756 in 2023, a decline of 21.2%[225] - The debt to total capitalization ratio was approximately 17.2% as of December 31, 2024, indicating a stable financial structure[175] - Net debt to total capitalization ratio remained low at 10.7% as of December 31, 2024, with a target of approximately 20% for growth capital[176] Inventory and Development - Total inventory increased to $1,937.7 million as of December 31, 2024, compared to $1,533.2 million as of December 31, 2023[320] - The company’s inventory, including homes completed or under construction and land and lots inventory, was valued at $1,938 million as of December 31, 2024[220] - The increase in inventory was significant at $403,312 in 2024, compared to $109,243 in 2023[234] Expenses and Costs - Selling, general and administrative expenses as a percentage of revenue remained stable at 10.8% for the year[159] - Income tax expense rose to $94,700,000 from $84,600,000, attributed to higher taxable income[164] - Depreciation expense for the year ended December 31, 2024, totaled $4,800,000, up from $3,500,000 in 2023, representing a 37.1% increase[341] Shareholder Equity and Dividends - The company paid dividends of $2.9 million on the Series A Preferred Stock for both 2024 and 2023[189] - Total stockholders' equity is projected to reach $1,625,415,000 by December 31, 2024[231] - The company repurchased 860,659 shares of treasury stock for $48,035,000 during the reporting period[231] Other Income and Expenses - Other income increased to $29,800,000, up from $19,400,000, mainly due to a gain from the sale of an investment[163] - The company recognized a gain of $10,700,000 from the sale of its 49.9% ownership interest in GB Challenger, LLC, receiving approximately $64,000,000 in cash[338] Risk Factors - The company’s operations are sensitive to interest rate changes, which could adversely affect revenues, gross margins, and net income[209] - The Company performs ongoing reassessments to determine if it is the primary beneficiary of any Variable Interest Entities (VIEs) it may have[263]