%GreenBrickPartners (NYSE: $GRBK) is a small home builder that has consistently delivered big returns to its shareholders.
Based in Plano, Texas, Green Brick is a regional builder of suburban homes. The company primarily operates in Texas, Georgia and Florida.
It acquires land to develop residential lots and builds homes on them. The company also transfers some lots to third-party homebuilders and provides mortgage and title services.
The company is small compared to many national U.S. homebuilders, and, with a market capitalization of $2.62 billion U.S., is a small-cap stock.
However, there’s nothing small about the performance of GRBK stock. Green Brick’s shares have consistently outperformed other homebuilders and the broader market.
This year, Green Brick’s stock is up 8% while the benchmark S&P 500 index has gained 2%. Over the past five years, the company’s share price has risen 437%.
The stock has steadily grown alongside Green Brick Partners’ financial results.
In this year’s first quarter, Green Brick Partners reported double-digit revenue growth. The company also maintains low debt and has almost $2 billion U.S. in land and housing inventory.
Analysts view Green Brick Partners as a great capital allocator and praise management’s slow and steady expansion, most recently entering the housing market in Houston, Texas.
Perhaps best of all, Green Brick Partners is expected to benefit as the U.S. housing market recovers amid declining interest rates and pent-up demand for new homes.
Analysts note that there is a chronic undersupply of homes in the U.S. as housing starts have not kept pace with demand and people with low mortgage rates have stayed in existing homes.
That situation could change over the next year, giving a boost to Green Brick Partners.
The company also benefits from operating in Texas and Florida, two of the fastest growing states in terms of population as people chase lower tax rates and sun destinations.
It should also be noted that GRBK stock is a top holding of billionaire value investor David Einhorn, who runs the Greenlight Capital hedge fund.
Despite being up on the year, Green Brick Partners is currently trading at $59.60 U.S. per share, which is 30% below its 52-week high and just seven times future earnings estimates.
The low valuation and dip in the share price might be of interest to value investors.
