Florida-based WCI Communities reported strong third-quarter earnings this week after a stout increase in the number of new homes delivered and home building revenue and margins.

“We expect a positive reaction by the stock today,” J.P. Morgan’s Michael Rehaut said Wednesday, “as EPS was solidly above the Street and our estimate, driven by better than expected home building revenue and margins, while orders were also strongly above our estimate and we believe investor expectations." 

Rehaut explained that gross margins of 26.9% were higher than Rehaut’s projected 25.6% and the 61% rise in orders greatly outpaced the forecast of 40%.

WCI Communities

The company delivered 258 homes in the third quarter, an increase of 112 units, or 76.7% from the prior-year period. The average selling price per home delivered during the quarter was $462,000, an increase of 8.2%, compared to $427,000 in the prior-year period. 

“We achieved significant year-over-year improvement across our key operating metrics with another quarter of strong financial results,” said Keith Bass, WCI’s president and CEO, in a press release. "I am extremely pleased with our continued success in executing our growth strategy and ability to gain scale in the business. Throughout our coastal markets, demand for our award-winning homes and communities remains robust. In addition, we continue to see positive demographic and economic indicators in Florida, which we believe will sustain the long-term growth of our housing markets."  

Revenues reached $150.2 million, increasing $60.5 million (or 67.4%) , with a net debt-to-cap of 17.8%.

“Overall, we rate WCIC Underweight, as we believe its material valuation premium more than reflects our fundamental outlook for continued strong performance,” Rehaut said.