There are hundreds of building companies across the U.S., from the ones operated out of the back of a pickup truck to the ones delivering thousands of homes each year. Our annual public builder report card focuses on the latter group.
Each year, the report aims to provide an “apples-to-apples” comparison of the performance of the country’s public home builders. To achieve this, we took all disclosed company data and mapped it to a calendar year.
In 2016, we changed the format to provide a strictly formulaic grade for each company. Companies are ranked from first to last in each of the four major categories—financial, land, operations, and sales and marketing (these categorical breakdowns are reflected in each firm’s individual report cards). Each rank is then given a score. Scores are weighted and added together to produce a final rating. The financial category carries the most weight, worth 40% of the overall score; the other three categories are each worth 20%.
We also kept a change to the land category made in 2017, replacing “years supply of lots” with “lots optioned to total controlled.” In previous versions of this report card, firms were given credit for having more land on their books, but these days owning land isn’t necessarily positive. If a company owns too much land it could be exposed if the market turns.
It seems that many of the public builders agree with that sentiment. On average, the number of lots that are optioned by public companies went up 27% in 2017, while the number of lots owned increased only 3%.
Also of note, land revenues on average dropped 6.5% year over year, indicating that public builders are holding onto land more as finished lots grow scarcer.
This year’s report card profiles 19 public companies, down from 21 last year thanks to Century Communities’ merger with UCP and Lennar Corp.’s acquisition of CalAtlantic Group. CalAtlantic is not included in this report despite operating in 2017, because its acquisition closed before publication.
To view details of each company receiving A, B, and C grades, select the corresponding report below.
It’s important to note that, as always, these grades are not to be taken as qualified evaluations of company financial management.
Our thanks goes out to the team that culled the filings and ranked and scored the companies. The group included Dennis Fisher, Kevin Bonalle, Bethany Spencer, and Anthony Popolo, accounting students in the Accounting, Business and Economic department of Juniata College in Huntingdon, Pa.