M.D.C. Holdings Inc. Earnings: Margins Shrink For Fifth Straight Quarter

M.D.C. Holdings Inc.’s (NYSE:MDC) fourth quarter loss narrowed, beating estimates. M.D.C. Holdings operates in the field of homebuilding and financial services. Its homebuilding operations consist of construction and sale of single-family detached homes and financial services includes mortgage loans and title agency services.

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M.D.C. Holdings Earnings Cheat Sheet for the Fourth Quarter

Results: Loss narrowed to $18.8 million (loss of 40 cents per diluted share) from $30 million (loss of 65 cents per share) in the same quarter a year earlier.

Revenue: Fell 4.7% to $247.4 million from the year earlier quarter.

Actual vs. Wall St. Expectations: M.D.C. Holdings Inc. beat the mean analyst estimate of a loss of 47 cents per share. Analysts were expecting revenue of $249.2 million.

Quoting Management: Larry A. Mizel, MDC’s chairman and chief executive officer, stated, “In the fourth quarter of 2011, excluding debt extinguishment and land-related charges, we achieved profitability, thereby providing strong evidence of the meaningful progress we have made in implementing Company initiatives over the past few quarters.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 21.9 percentage points to -2.3% from the year earlier quarter. Over that time, margins have contracted on average 8.2 percentage points per quarter on a year-over-year basis.

Revenue has fallen for the past three quarters. In the third quarter, revenue declined 6.3% to $211.4 million while the figure fell 33.9% in the second quarter from the year earlier.

The company has now beaten estimates the last two quarters. In the third quarter, it topped expectations with a loss of -32 cents versus a mean estimate of a loss of 50 cents per share.

Looking Forward: Analysts seem more positive about the company’s results for the next quarter than three months ago. The average estimate for the first quarter of the next fiscal year has moved from a loss of 33 cents a share to a loss of 28 cents over the last ninety days. For the fiscal year, the average estimate has moved from a loss of $1.76 a share to a loss of $2.11 over the last ninety days.

(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

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To contact the reporter on this story: Derek Hoffman at staff.writers@wallstcheatsheet.com

To contact the editor responsible for this story: Damien Hoffman at editors@wallstcheatsheet.com