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Smith Douglas Homes Corp. Class A (SDHC)
NYSE:SDHC
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Smith Douglas Homes Corp. Class A
(NYSE:SDHC)
Select Model
Select Model
Rating:57Neutral
Price Target:
$20.50
▲(16.08% Upside)
The overall stock score reflects significant financial challenges, including declining revenues and negative cash flows, which weigh heavily on the company's outlook. While the earnings call provided some positive insights into operational performance and strategic growth, these are offset by ongoing cost pressures and market challenges. The technical analysis suggests neutral momentum, and the valuation appears reasonable, but the lack of a dividend yield is a drawback for income investors.
Positive Factors
Market Expansion
Entering new markets like Dallas-Fort Worth and Gulf Coast of Alabama can drive long-term growth by tapping into new customer bases and increasing market share.
Operational Efficiency
Improved construction efficiency reduces costs and accelerates project completion, enhancing profitability and competitive advantage in the long term.
Active Communities Growth
An increase in active communities indicates successful expansion and potential for increased revenue streams, strengthening the company's market position.
Negative Factors
Declining Revenue
A substantial decline in revenue growth can hinder the company's ability to invest in new projects and maintain competitive positioning, impacting long-term viability.
Negative Cash Flows
Negative cash flows pose a risk to financial stability, limiting the company's ability to fund operations and growth initiatives, potentially leading to financial distress.
Affordability Challenges
Affordability challenges and low consumer confidence can reduce demand for homes, impacting sales and revenue, and posing long-term risks to the business model.
Smith Douglas Homes Corp. Class A (SDHC) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$765.12M
Dividend YieldN/A
Average Volume (3M)84.25K
Price to Earnings (P/E)10.9
Beta (1Y)1.02
Revenue Growth22.89%
EPS Growth-79.46%
CountryUS
Employees445
SectorGeneral
Sector StrengthN/A
IndustryReal Estate - Development
Share Statistics
EPS (TTM)0.26
Shares Outstanding9,017,152
10 Day Avg. Volume128,558
30 Day Avg. Volume84,254
Financial Highlights & Ratios
PEG Ratio-0.58
Price to Book (P/B)3.08
Price to Sales (P/S)0.23
P/FCF Ratio14.88
Enterprise Value/Market Cap0.74
Enterprise Value/Revenue0.56
Enterprise Value/Gross Profit2.25
Enterprise Value/Ebitda5.12
Forecast
1Y Price Target
$18.30Price Target Upside3.62% Upside
Rating ConsensusHold
Number of Analyst Covering5
Smith Douglas Homes Corp. Class A Business Overview & Revenue Model
Company DescriptionSmith Douglas Homes Corp. engages in the design, construction, and sale of single-family homes in the southeastern United States. The company operates in metropolitan Atlanta, Birmingham, Charlotte, Huntsville, Nashville, Raleigh-Durham, and Houston. It also provides closing, escrow, and title insurance services. The company was founded in 2008 and is headquartered in Woodstock, Georgia.
How the Company Makes MoneySmith Douglas Homes Corp. makes money through the construction and sale of residential homes. The company's primary revenue stream comes from the sale of single-family homes to individual buyers. By strategically selecting land in growing markets and using cost-effective building practices, Smith Douglas Homes can offer competitively priced homes. The company may also generate revenue from partnerships with land developers and real estate agents, which help facilitate the sale of homes. Additionally, Smith Douglas Homes may offer financing options or collaborate with mortgage lenders to assist buyers in purchasing their homes, potentially earning fees or commissions from these services.
Smith Douglas Homes Corp. Class A Earnings Call Summary
Earnings Call Date:Aug 06, 2025
(Q2-2025)
| % Change Since: |
Next Earnings Date:Nov 18, 2025
Earnings Call Sentiment Neutral
Smith Douglas Homes demonstrated strong operational performance and strategic growth through market expansion and improved construction efficiency. However, financial results were pressured by higher costs and lower net income, with ongoing challenges in consumer affordability and confidence.Q2-2025 Updates
Positive Updates
Strong Operational Performance
Smith Douglas Homes reported a pretax income of $17.2 million and earnings of $0.26 per diluted share. Home sales revenue was $224 million for the quarter, with home closings of 669, exceeding the guidance range. Gross margin was at the high end of guidance at 23.2%.
Increase in Active Communities and Controlled Lot Count
The company ended the second quarter with 92 active communities, a 23% increase over the second quarter of 2024, and improved controlled lot count by 57% compared to a year ago to almost 25,000 lots.
Expansion into New Markets
Smith Douglas Homes announced entry into the Dallas-Fort Worth and Gulf Coast of Alabama markets through greenfield start-ups, with expectations to start selling by year-end in DFW.
Improvement in Construction Efficiency
Average cycle time, excluding Houston, was 54 days, down from 60 days in the second quarter of 2024.
Favorable Debt Position
Net debt to net book capitalization ratio was 12.1% at the end of the quarter, with flexibility to utilize a $50 million share repurchase authorization.
Negative Updates
Decline in Net Income
Net income for the quarter was $16.4 million, down from $24.7 million in the prior year, and adjusted net income was $12.9 million compared to $19.4 million in the prior year.
Pressure on Gross Margin
Gross margin decreased year-over-year from 26.7% to 23.2%, impacted by higher average lot costs and rising incentives and promotional activity.
Affordability Challenges
Affordability constraints, declining consumer confidence, and a lack of urgency from buyers were noted as ongoing headwinds for the industry.
Higher SG&A Expenses
SG&A expenses increased by $2.9 million year-over-year, driven by increased payroll and expenses associated with the opening of new divisions.
Company Guidance
During Smith Douglas Homes' Second Quarter 2025 earnings call, several key metrics and guidance details were shared. The company reported a pretax income of $17.2 million and earnings of $0.26 per diluted share. Home sales revenue reached $224 million from 669 home closings, surpassing the previous guidance range, while the gross margin on home closings was at the high end of the guidance range at 23.2%. The average sales price for homes closed was $335,000, and the company ended the quarter with 92 active communities, a 23% increase from the previous year. Controlled lot count improved by 57% year-over-year to nearly 25,000 lots. The company announced plans to expand into the Dallas-Fort Worth and Gulf Coast of Alabama markets. Despite a challenging macroeconomic environment, Smith Douglas Homes maintained a net debt to net book capitalization ratio of 12.1% and outlined expectations for the third quarter, forecasting 725 to 775 home closings with an average sales price between $330,000 and $335,000, and a projected gross margin range of 20.5% to 21.5%.Smith Douglas Homes Corp. Class A Financial Statement Overview
Summary
Smith Douglas Homes Corp. Class A faces significant challenges with declining revenues and profitability. While operational efficiency has improved, the increased leverage and negative cash flows raise concerns about financial stability. The company needs to address revenue growth and cash flow management to improve its financial health.Income Statement
The income statement shows a significant decline in revenue growth, with a TTM revenue growth rate of -44.08%. Gross profit margin improved to 44.66% in the TTM, indicating better cost management. However, net profit margin remains low at 2.56%, reflecting challenges in converting revenue into profit. The EBIT and EBITDA margins have improved, suggesting operational efficiency, but the overall profitability is weak due to declining revenues.45
Neutral
Balance Sheet
The balance sheet indicates a moderate debt-to-equity ratio of 0.93 in the TTM, showing increased leverage compared to previous years. Return on equity has decreased to 19.40%, reflecting reduced profitability. The equity ratio stands at 14.02%, indicating a relatively low proportion of equity financing. Overall, the balance sheet shows increased financial risk due to higher leverage.60
Neutral
Cash Flow
Cash flow analysis reveals negative operating and free cash flows in the TTM, with a significant decline in free cash flow growth. The operating cash flow to net income ratio is negative, indicating cash flow challenges. Despite a high free cash flow to net income ratio, the negative cash flows pose a risk to financial stability.40
Negative
| Breakdown | TTM | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 1.01B | 975.46M | 764.63M | 755.35M | 518.86M |
| Gross Profit | 252.49M | 255.54M | 216.33M | 222.75M | 122.95M |
| EBITDA | 111.19M | 121.21M | 125.92M | 142.31M | 65.72M |
| Net Income | 14.50M | 16.07M | 123.18M | 140.44M | 62.53M |
Balance Sheet | |||||
| Total Assets | 570.22M | 475.90M | 352.69M | 223.37M | 201.19M |
| Cash, Cash Equivalents and Short-Term Investments | 16.78M | 22.36M | 19.78M | 29.60M | 25.34M |
| Total Debt | 74.09M | 12.07M | 78.40M | 18.39M | 74.41M |
| Total Liabilities | 155.39M | 74.17M | 143.79M | 58.86M | 105.67M |
| Stockholders Equity | 79.98M | 73.63M | 208.90M | 164.51M | 95.52M |
Cash Flow | |||||
| Free Cash Flow | -39.95M | 15.24M | 74.95M | 131.09M | 30.14M |
| Operating Cash Flow | -35.48M | 19.13M | 76.26M | 132.09M | 30.87M |
| Investing Cash Flow | -5.78M | -4.71M | -76.83M | 361.00K | 847.00K |
| Financing Cash Flow | 40.74M | -11.84M | -9.25M | -128.19M | -38.54M |
Smith Douglas Homes Corp. Class A Technical Analysis
Negative
17.66
Price Trends
19.40
Negative
19.25
Negative
20.91
Negative
Market Momentum
-0.51
Positive
41.39
Neutral
38.01
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SDHC, the sentiment is Negative. The current price of 17.66 is below the 20-day moving average (MA) of 18.67, below the 50-day MA of 19.40, and below the 200-day MA of 20.91, indicating a bearish trend. The MACD of -0.51 indicates Positive momentum. The RSI at 41.39 is Neutral, neither overbought nor oversold. The STOCH value of 38.01 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SDHC.
Smith Douglas Homes Corp. Class A Risk Analysis
Smith Douglas Homes Corp. Class A disclosed 83 risk factors in its most recent earnings report. Smith Douglas Homes Corp. Class A reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Smith Douglas Homes Corp. Class A Peers Comparison
UnderperformOutperform
Sector (55)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $1.35B | 8.34 | 12.76% | ― | 2.35% | -17.21% | |
75 Outperform | $650.84M | 5.68 | 9.11% | ― | -19.68% | 44.82% | |
57 Neutral | $765.12M | 10.95 | 20.41% | ― | 22.89% | -79.46% | |
43 Neutral | $258.92M | -22.84 | -2.42% | ― | -4.84% | -412.72% | |
55 Neutral | $6.65B | 3.83 | -15.92% | 6.20% | 10.91% | 7.18% |
* General Sector Average
SDHC
Smith Douglas Homes Corp. Class A
17.66
-19.86
-52.93%
ARL
American Realty Investors
16.73
-0.14
-0.83%
FOR
Forestar Group
26.59
-5.71
-17.68%
FPH
Five Point Holdings
6.13
2.05
50.25%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.