They were flat in July, up 20% in August, but expected to somehow grow revenue 24% for the quarter?
Hi Bear, You are forgetting that what you are talking about is number of closings, not revenue. Average revenue per closing was up 6% year over year, and rising. Thus a 20% increase in closings comes to 27.2% more revenue, etc (1.06 times 1.20 = 1.272), so it may not be so undo-able. And they are starting to sell more in the Pacific NW, where prices are $275,000 instead of $195,000. They may grow average selling price by more than 6%.
You need to remember that they predicted average selling price for the year of $195 to $205,000. They were well into August when they said that. Average price last year was $185,000. If they hit an average sale price of $201,000 for the year, just above the midpoint of their projection, average sales price will be up 8.65% year over year.
And let’s look at this quarter: Average sales prices look like this:
If you put that together with their estimate (that they just gave) of average sale price for the year $195,000 - $205,000, and with the last two quarters being up at least $5,000 each, you have to assume they are expecting AT LEAST $202.5 this quarter (up another $5,000) to give them the midpoint of their estimate by the end of the year. (With the December up an additional $5,000 to $207,500 it would give them an average of $200,000, which is right in the middle of their estimate).
That $202,500 for this quarter is up 8.9% from the $186,000 last September. SO…if they hit just 15% more closings yoy for the quarter, revenue will be up over 25% for the quarter. If they have a big month and average 16% more closings for the quarter as their new communities get up and running, they will increase revenue by 26.3%. I don’t see revenue up 24% for the quarter as impossible. Do you?
And average sales price will probably be up at least 10% for the December quarter against a price last year of $187,000. Just saying. Don’t give up on them yet.
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