NEW YORK (TheStreet) -- TRI Pointe Homes (TPH) shares are up 1.1% to $16.02 on Tuesday following its announcement that it had closed a $2.8 billion merger with Weyerhaeuser Real Estate Company (WY - Get Report).
The transaction positions TRI Pointe Homes as one of the top 10 largest public home builders in the U.S., increasing its land inventory to 31,000 lots as a result of the merger.
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TheStreet Ratings team rates TRI POINTE HOMES INC as a Hold with a ratings score of C-. TheStreet Ratings Team has this to say about their recommendation:
"We rate TRI POINTE HOMES INC (TPH) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, largely solid financial position with reasonable debt levels by most measures and impressive record of earnings per share growth. However, as a counter to these strengths, we also find weaknesses including a generally disappointing performance in the stock itself and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- TPH's very impressive revenue growth greatly exceeded the industry average of 17.4%. Since the same quarter one year prior, revenues leaped by 161.1%. Growth in the company's revenue appears to have helped boost the earnings per share.
- The current debt-to-equity ratio, 0.54, is low and is below the industry average, implying that there has been successful management of debt levels.
- Net operating cash flow has increased to -$41.63 million or 12.20% when compared to the same quarter last year. Despite an increase in cash flow of 12.20%, TRI POINTE HOMES INC is still growing at a significantly lower rate than the industry average of 251.42%.
- The gross profit margin for TRI POINTE HOMES INC is rather low; currently it is at 22.59%. Regardless of TPH's low profit margin, it has managed to increase from the same period last year. Despite the mixed results of the gross profit margin, TPH's net profit margin of 5.90% compares favorably to the industry average.
- In its most recent trading session, TPH has closed at a price level that was not very different from its closing price of one year earlier. This is probably due to its weak earnings growth as well as other mixed factors. Looking ahead, we do not see anything in this company's numbers that would change the one-year trend. It was down over the last twelve months; and it could be down again in the next twelve. Naturally, a bull or bear market could sway the movement of this stock.
- You can view the full analysis from the report here: TPH Ratings Report