M.D.C. Holdings, Inc. (MDC) is a home builder and also provides mortgage financing, insurance, and title services through its subsidiaries. MDC’s recent fourth-quarter performance fell short of estimates on both its top-line and bottom-line fronts.
Driven by higher unit deliveries and an increased average selling price, revenue gained 19.6% year-over-year to $1.47 billion, but lagged the Street’s expectations by $113.3 million. Earnings per share at $2.21 fell short of estimates by $0.28. The company ended the year with a backlog of $4.3 billion.
Management sees a favorable environment amid a shortage of existing home supply, robust demand, pricing power, and favorable demographics.
With these developments in mind, let us take a look at the changes in MDC’s key risk factors that investors should know.
Risk Factors
According to the TipRanks Risk Factors tool, MDC’s top risk category is Production, contributing 26% (compared to a sector average of 20%) to the total 19 risks identified. In its recent report, the company has changed two key risk factors.
Under the Production risk category, MDC noted that the COVID-19 pandemic and strong demand for new homes has led to supply chain disruptions resulting in a shortage of materials and higher demand in the labor market.
Consequently, MDC’s land development and construction cycle times have lengthened along with higher costs. If the company is unable to pass on these higher costs, then its financial position could suffer.
Meanwhile, under the Macro & Political risk category, MDC highlighted that if the COVID-19 pandemic continues to impact the U.S. economy and consumer confidence, then its results of operations and cash flows could suffer.
Tracking Insiders
Keeping a tab on insiders stocks can provide timely insights for retail investors. According to TipRanks data on Insider Activity, insiders have sold MDC shares worth $380.2 thousand in the last three months, indicating a negative insider confidence signal for the stock.
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