Green Brick (GRBK) is a diversified homebuilding and land development company primarily focused in the Dallas-Fort Worth market, suggests Tom Bishop, small cap expert and editor of BI Research.
The firm also has with operations to a lesser extent in Atlanta, Port Saint Lucie, Florida and Colorado. It is engaged in all aspects of the homebuilding and selling process primarily operating through master planned communities.
It has about 100 of these communities with 12 opened recently and 22 more in various stages of development. Low interest rates and a migration to homes with more space add fuel.
Lately, it seems like the homebuilding group is going through some profit taking perhaps on promising vaccine news which could eventually slow the migration from cities to new, more spacious houses in the suburbs.
On the other hand, there is believed to be a lot of pent-up demand from millennials that some think could fuel this market for several years along with low interest rates.
Q3 results were released in late October that absolutely trounced estimates and were covered in the last issue, but it was too soon to see the resulting estimate revisions.
Since then the 2020 EPS estimate has risen $0.37 from $1.92 to $2.29 and vs. $1.16 in 2019. And the 2021 estimate has surged to $2.75 (representing growth of 20%) vs. the pre-Q3 release estimate of $2.14. This would equate to a forward PE of 8.
My original 2021 estimate of $2.60 attempted to take the Q3 results into account but analysts are now even above that. Its IBD score (Investor's Business Daily) is the highest possible at 99, its relative earnings strength is 98 and our proprietary ranking is a very strong buy.
