First Read: US Building "House passes revised 21st Century ROAD to Housi..."

研报英文原文证据摘录

First Read: US Building "House passes revised 21st Century ROAD to Housi..."

Valuation Method and Risk Statement

Homebuilders: We use P/E as the primary metric for valuing the homebuilder stocks, which

we believe is appropriate given low levels of financial leverage and significantly less on

balance sheet land versus prior cycles. We apply a P/E multiple to our ‘27e EPS in order to

value the shares at our PT date (yr end ’26e) using 1-year forward EPS (’27e). We also use P/B

as a secondary valuation method for the homebuilders, using ’26e book value, which is

consistent with using ’26e EV in our Building products EV/EBITDA calculations.

Homebuilder Risks: 1) rising interest rates and home prices could negatively impact

affordability, 2) slowing economic activity could lower consumer confidence, 3) if housing

demand declines, the company could face substantial inventory risks, 4) sustained supply

shortages could impact operating margins and delay deliveries, 5) public health issues could

impact economic activity, company operations, and the global supply chain, 6) weather

conditions and natural disasters could delay development work and increase costs, 7) health

and safety incidents could lead to potential liabilities and reputational damage, 8)

government regulation could increase the cost and availability of land development and

homebuilding projects, 9) debt levels could affect the company’s ability to raise additional

capital to fund operations, 10) availability of labor could impact development costs and

delivery times, 11) inability to offset raw material costs with pricing.

Building Products: We use adj. EV/EBITDA as the primary metric for valuing building products

stocks due to varying degrees of financial leverage and capital intensity across the group and