Century Communities stock initiated with Buy rating at Texas Capital

Texas Capital Securities initiated coverage on Century Communities (NYSE:CCS) with a Buy rating and a price target of $68.00 on Monday. The Denver-based company, currently trading at an attractive P/E ratio of 5.5x, ranks among the top 10 national homebuilders, operating in more than 45 markets across 17 states. InvestingPro analysis suggests the stock is currently undervalued, trading near its 52-week low of $50.42.

The firm cited Century Communities’ competitive advantage through its Century Complete brand, which targets entry-level, first-time homebuyers with affordable quick move-in spec homes. This segment represented 35% of the company’s 2024 home deliveries and accounted for 25% of lots by the end of 2024, marking a 20% year-over-year increase. Despite a challenging market environment that has seen the stock decline by 35% over the past six months, the company maintains strong liquidity with a current ratio of 5.54.

Texas Capital highlighted the homebuilder’s disciplined management team, which has driven 22 consecutive years of profitability through various housing cycles. The firm also noted significant insider ownership as a positive factor for the company. InvestingPro data reveals that management has been actively buying back shares, and the company has maintained a consistent dividend growth track record for four consecutive years, currently yielding 2.2%.

The research firm pointed to Century Communities’ improving balance sheet leverage and ongoing share repurchase program as additional strengths. These factors contribute to the positive outlook despite broader industry challenges.

While acknowledging that Century Communities would not be immune to macroeconomic industry trends, Texas Capital expressed confidence that the homebuilder should outperform most of its peers in the current market environment.

In other recent news, Century Communities reported its first-quarter 2025 earnings, revealing an adjusted earnings per share (EPS) of $1.36, which fell short of the forecasted $1.76. However, the company’s revenue slightly exceeded expectations, totaling $903.2 million against a forecast of $903.03 million. Despite the revenue beat, the company experienced a 4% year-over-year decrease in home sales revenues, amounting to $884 million. Century Communities delivered 2,284 homes during the quarter, marking a 3% decline from the previous year. The average sales price also saw a slight decrease of 1% year-over-year, coming in at $387,000. Analysts have noted the company’s proactive measures in managing costs and incentives to navigate the current economic landscape. The firm has set a full-year guidance for home deliveries between 10,400 and 11,000 homes, with projected home sales revenue ranging from $4.0 billion to $4.2 billion. Additionally, Century Communities plans to increase its community count by a mid-single-digit percentage, aiming for sequential delivery growth in the latter half of the year.

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