I have to say, in my couple years of reading this baord, the following is one of the strongest endorsements I’ve heard from Saul…I bought as much as I could afford…
Hey guys, I’ve always said that
A: I make plenty of mistakes, and
B: Don’t buy anything on the basis of what I do. I’m not an advisor and you have to make your own decisions. In this case I was clear that I was just telling you what I did, and why. You are all welcome to disagree if you wish.
Here’s what I was seeing:
Here’s what Revenue looks like (in millions):
2012 143
2013 246
2014 383
2015 630
As you see revenue more than quadrupled in three years. It looks like it will be about $830 million in 2016 (up 32%).
Here’s what EPS looks like:
2012 0.43
2013 1.07
2014 1.38
2015 2.50
As you see they more than sextupled in three years. It looks like it will be about $3.30 to $3.50 in 2016 (up 32% to 40%).
Here’s what Cash Flow per share looks like (in dollars per share):
2012 1.04
2013 1.33
2014 2.43
2015 3.17
Their number of closings have been:
2012 1062
2013 1617
2014 2356
2015 3404
2016 4163
They more than tripled in three years. And quadrupled in four.
Their average price per closing is also rising rapidly as they expand:
2012 $135,000
2013 $149,000
2014 $163,000
2015 $185,000
And will be over $200,000 in 2016.
Average gross margins have been very stable:
2012 28.0%
2013 27.3%
2014 28.2%
2015 27.8%
Now here’s the good part:
Their current P/S ratio is about 0.7 (!)
Their current P/E ratio is 8.8 (!)
Now some of you want me to believe that the smart young guys who accomplished all this have suddenly lost their touch completely, and their business is collapsing, because of one low month of closings. Or because of a quarter point rise from almost zero interest rates. You’ve got to be kidding. Sorry, but I just don’t believe it. Especially when they tell me that sales were strong in January, the GDP is growing like mad, employment is good, wages are finally rising, etc etc. Nope, I don’t believe it. But that’s just me!
Saul