Smith Douglas Homes Corp. Class A (SDHC) AI Stock Analysis

• Market Cap: $928.22M
• Dividend Yield: N/A
• Average Volume (3M): 80.35K
• Price to Earnings (P/E): 14.2
• Beta (1Y): 1.15
• Revenue Growth: 10.26%
• EPS Growth: -73.20%
• Country: US
• Employees: 445
• Sector: Real Estate
• Sector Strength: 53
• Industry: Real Estate - Development
• EPS (TTM): 0.24
• Shares Outstanding: 9,017,638
• 10 Day Avg. Volume: 84,466
• 30 Day Avg. Volume: 80,347
• PEG Ratio: -0.58
• Price to Book (P/B): 3.08
• Price to Sales (P/S): 0.23
• P/FCF Ratio: 14.88
• Enterprise Value/Market Cap: 1.07
• Enterprise Value/Revenue: 0.99
• Enterprise Value/Gross Profit: 4.23
• Enterprise Value/Ebitda: 11.06
• 1Y Price Target: $16.50
• Price Target Upside: -8.54% Downside
• Rating Consensus: Hold
• Number of Analyst Covering: 5
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 56 Neutral
• Price Target: $22.50 ▲(24.72% Upside)

The overall stock score of 56 reflects significant financial challenges, including declining revenue and cash flow issues, which weigh heavily on the company's outlook. While technical indicators show some short-term bullish momentum, valuation metrics and earnings call insights reveal underlying profitability concerns. Strategic expansions offer potential growth, but increased cost pressures and declining margins are notable risks.

Positive Factors

Controlled Lot Expansion

A materially larger controlled lot base provides durable revenue visibility and scalability: it lowers dependence on third-party land purchases, supports steady community starts, and creates a multi-quarter pipeline that helps smooth production and revenue over housing cycles.

Order Momentum and Backlog

Rising net orders and a meaningful backlog indicate persistent end-market demand and conversion capability. A healthy order book improves short-to-medium term cash flow visibility and enables planned community absorption, helping revenue and margin planning across quarters.

Strong Reported Margins

High gross and net margins imply structural cost efficiency in homebuilding and pricing power versus inputs. If maintained, these margins give the company resilience against input cost volatility and support reinvestment, enabling sustained returns despite cyclical demand.

Negative Factors

Sharp Revenue Contraction

A severe drop in revenue erodes scale economics and jeopardizes fixed-cost absorption, making margins harder to sustain. Prolonged revenue weakness constrains reinvestment in land and communities and raises execution risk for the growth strategy over the next several quarters.

Negative Operating Cash Flow

Persistent negative operating cash flow signals liquidity stress and potential reliance on external financing or asset dispositions to fund operations and lot purchases. That dynamic can limit strategic flexibility and increase financing costs, pressuring long-term capital allocation.

Higher Leverage and Falling ROE

Rising leverage combined with a sharp ROE decline indicates reduced capital efficiency and increased financial risk. Higher debt levels constrain ability to finance new communities internally and raise vulnerability to rising interest rates, affecting long-term growth execution.

Smith Douglas Homes Corp. Class A Business Overview & Revenue Model

Company Description

Smith 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 Money

Smith Douglas Homes Corp. generates revenue primarily through the sale of residential properties, which includes the construction and sale of new homes. The company profits by acquiring land, developing it into residential communities, and building homes that meet the demands of local markets. Key revenue streams include home sales, which are driven by market demand and pricing strategies, as well as potential ancillary services such as mortgage origination and home warranty offerings. SDHC may also benefit from partnerships with local contractors and suppliers, which can enhance its operational efficiency and cost management, ultimately contributing to its profitability.

Smith Douglas Homes Corp. Class A Financial Statement Overview

Summary

Smith Douglas Homes Corp. faces significant challenges with declining revenue and cash flow issues in the TTM period. While profitability margins remain strong, the increased debt levels and reduced return on equity suggest potential financial strain. The company needs to address its cash flow and revenue growth to stabilize its financial position.

Income Statement

The income statement shows a significant decline in revenue growth rate of -71.65% in the TTM period, indicating a major downturn. However, the company maintains a strong gross profit margin of 81.31% and a net profit margin of 19.29% in the TTM, reflecting efficient cost management. Historical data shows fluctuating margins with a peak in 2022, but recent trends suggest declining profitability.

Balance Sheet

The balance sheet reflects moderate leverage with a debt-to-equity ratio of 0.65 in the TTM, which is higher than previous years, indicating increased reliance on debt. The return on equity has decreased to 19.40% in the TTM from a high of 85.37% in 2022, suggesting reduced profitability for shareholders. The equity ratio remains stable, indicating a balanced asset structure.

Cash Flow

The cash flow statement reveals negative operating cash flow and free cash flow in the TTM, indicating liquidity challenges. The free cash flow to net income ratio is positive at 1.13, but the negative operating cash flow coverage ratio of -1.68 highlights potential cash management issues. Historical data shows a decline in free cash flow growth, raising concerns about future cash generation.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021
Income Statement
Total Revenue	998.17M	975.46M	764.63M	755.35M	518.86M
Gross Profit	233.77M	255.54M	216.33M	222.75M	122.95M
EBITDA	89.40M	121.21M	125.92M	142.31M	65.72M
Net Income	11.28M	16.07M	123.18M	140.44M	62.53M
Balance Sheet
Total Assets	571.56M	475.90M	352.69M	223.37M	201.19M
Cash, Cash Equivalents and Short-Term Investments	14.78M	22.36M	19.78M	29.60M	25.34M
Total Debt	55.79M	12.07M	78.98M	18.39M	74.41M
Total Liabilities	145.12M	74.17M	143.79M	58.86M	105.67M
Stockholders Equity	82.18M	73.63M	208.90M	164.51M	95.52M
Cash Flow
Free Cash Flow	-40.80M	15.24M	74.95M	131.09M	30.14M
Operating Cash Flow	-35.62M	19.13M	76.26M	132.09M	30.87M
Investing Cash Flow	-6.50M	-4.71M	-76.83M	361.00K	847.00K
Financing Cash Flow	33.17M	-11.84M	-9.25M	-128.19M	-38.54M

Smith Douglas Homes Corp. Class A Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 18.04
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Neutral
• STOCH: 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 18.04 is below the 20-day moving average (MA) of 19.27, below the 50-day MA of 19.24, and below the 200-day MA of 18.88, indicating a bearish trend. The MACD of -0.20 indicates Positive momentum. The RSI at 41.52 is Neutral, neither overbought nor oversold. The STOCH value of 21.01 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 Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AXR	69 Neutral	$110.24M	10.51	8.04%	―	-27.32%	-15.12%
FPH	68 Neutral	$578.07M	6.43	12.52%	―	-1.52%	81.35%
FOR	66 Neutral	$1.32B	8.24	9.82%	―	10.13%	-18.11%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
SDHC	56 Neutral	$928.22M	14.23	14.98%	―	10.26%	-73.20%
ARL	53 Neutral	$278.30M	50.11	0.95%	―	-0.58%	―
AMBR	48 Neutral	$235.14M	-0.63	―	―	-75.38%	―