David Burrows Century Communities CCS-N BUY Apr 22, 2021

Sells to first-time home buyers in areas in the US that are growing quickly. Rising rates is a catalyst for people to buy a home. Very economically sensitive. As production goes up, margins expand. Really likes the homebuilding sector. No dividend. (Analysts’ price target is $71.50)

(A Top Pick Mar 11/21, Up 2%) Slightly higher rates will not derail the millennials in family formation mode. He'd buy here. Risk/reward is very good over the next 12 months. Use $60 as a stop.

(A Top Pick Mar 11/21, Up 4%) They build entry level housing. Be careful with stocks related to the housing industry due to rising interest rates which will affect mortgages etc.. They stopped out at $72 in January.

Trevor Rose’s Insights - Trevor’s most-liked answers from 5i Research

CCS has four analysts covering the company and we see two holds, one buy, and one strong sell. The stock did well in the last year up nearly 50%. Revenue and EPS have been in decline for the last year, but margins have improved over the last few quarters. The company is very levered with a net debt position of $1.02B. Cash from operations has also gone negative in the last two quarters. CCS pays a small dividend with a yield of 1.07%. We think that macro trends related to housing and interest rates benefit CCS, but fundmentals have not been as strong. If CCS can improve its revenues, results should improve. At a valuation of 11.6x forward earnings we are ok holding to see how the company performs in the first few quarters of 2024.
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