AV Homes (AVHI, Financial) has largely benefited from an improving home building market, which helped it to post solid improvement in the revenue and new orders right in the first quarter of 2015. Besides this, the company has also taken some strategic decisions in the past, which paid off for it, and, helped it to penetrate other segments beyond the active adult segment. This is a solid growth indicator for AV Homes, and, the management is now confident of solid growth in future. It is largely counting on its new markets which are maturing. It is expected to further ramp up its top and bottom line in upcoming quarters.
A strong performance sets the way for better times ahead
Let us have a look at its financial performance in brief. AV Homes’ quarterly revenue increase impressively by 34% to $58.8 million as compared to $43.9 million in the same quarter last year. Further, its excellent operating performance led it to see a solid 162% growth in the new orders which is a good sign for the company, as this indicates solid long term opportunities in hand. Also, its SG&A margins improved from 18.3% to 22.1%. Seeing such a growth, AV Homes has provided an aggressive outlook for 2015, and, will continue to focus on executing its long term growth strategies.
AV Homes is pleased with its performance in the recently reported first quarter. A commendable increase in the key financial elements indicates solid operational excellence. As new markets and communities come online, AV Homes is expecting more top-line growth along with improvement in the margins. In response to the growth, the home builder is focusing on penetration strategies and it is opening new communities, which will strengthen its long term growth prospects.
Moving on, AV Homes has acquired Royal Oak Homes in Orlando, which is a wise move by it, as this will help it to enter new markets in regions such as Jacksonville, Charlotte and Raleigh. AV Homes is optimistic about its business and it is now well positioned to capitalize the strategies and opportunities that it is seeing in front of it. It is also focusing on diversification platform to generate better opportunities in future. These efforts will not only increase its community count and operational efficiencies, but will also transform its business. These long term strategies will also deliver greater value to its shareholders leading to a good growth in the market share in future.
Conclusion
Now looking at the fundamentals, the stock doesn’t have a trailing as it posted loss in the recently reported quarter but the company has many strategic initiatives that seems promising and will lead to an improvement in its performance in future. The forward P/E of 28.60 indicates smooth earnings growth in the near term. All these valuation levels indicates that the stock is definitely a good investment option now, but, it might disappoint the investors in a long run as the housing market is expected to decline in the upcoming quarters.
