This a project of long term investment and see which housing or home buildign is a good long term investment. Analyzing technical and fundamental. Analyzing historical data (2 years) and calculate performance measurements, back-testing, forecasting, and using Capital Asset Pricing Model. Testing different trading strategies. Finding stock with lowest risks with highest returns.
CareTrust REIT, Inc. (CTRE)
The Home Depot, Inc. (HD)
Lennar Corporation (LEN)
LGI Homes, Inc. (LGIH)
Lowe's Companies, Inc. (LOW)
NVR, Inc. (NVR)
Use accountant statements and historical price in Python, R, Excel, Power BI, and Tableau for Stocks Analysis
Profitability Ratio is a set of financial metrics used to evaluate a company's ability to generate income (profit) in relation to its revenue, balance sheet assets, operating costs, and shareholders' equity during a specific period of time. These ratios provide insights into how effectively a company utilizes its assets to generate profit and create value for shareholders.
Operating Ratio is a financial metric that assesses how efficiently a company utilizes its assets.
Leverage Ratios are financial metrics used to determine the proportion of an organization's capital that is derived from debt. They provide a reliable indication of whether a business can fulfill its financial obligations.
Valuation Ratios are financial metrics that evaluate the relationship between the market value of a company or its equity and certain fundamental financial measures, such as earnings.
Liquidity Ratios are financial metrics that assess a company's ability to meet its debt obligations and its margin of safety. These ratios are calculated using metrics such as the current ratio, quick ratio, and operating cash flow ratio.
• Over the past five years, CareTrust REIT, Inc. has exhibited stability and consistent growth in profitability. This could be attributed to the strategic acquisitions they made, expanding their portfolio of senior apartments/buildings and nursing facilities for tenants. The impact of these acquisitions/investments is evident in the Cash Flow Statement.
• Looking at the Liabilities to Asset Ratio over the last 5 years, it can be observed that approximately half of CareTrust REIT, Inc's liabilities are being used to finance their assets, while the remaining portion comes from equity or shareholders.
• As mentioned earlier, when considering the Liabilities to Equity Ratio, CareTrust REIT, Inc demonstrates a higher reliance on equity for funding their business and operations.
• Over the past 5 years, CareTrust REIT has acquired a variety of properties to expand their housing options for seniors and nursing facilities. This expansion strategy may help explain the occasional negative cash flow experienced in certain years. Additionally, expenses such as dividends and debt repayment could also contribute to this situation.
• Over the past 5 years, Home Depot has maintained a stable condition and has consistently shown steady gains.
• When examining the Liabilities to Asset Ratio over the last 5 years, Home Depot has been close to or exceeding its liabilities compared to its assets. This could indicate that the company is experiencing distress and/or may face difficulties in repaying its debts. However, it is highly unlikely that Home Depot will go bankrupt despite having higher liabilities than assets.
• Looking at the Liabilities to Equity ratio over the last 5 years, Home Depot has had excessive liabilities in comparison to its Shareholder’s Equity. Furthermore, there were years with a negative ratio, indicating that liabilities exceeded assets.
• Analyzing the Net Cash from Acquisitions & Divestitures in 2020, it appears that Home Depot made a significant acquisition in December of that year. They acquired HD Supply, which explains the relatively large difference in total cash from Investing Activities compared to the years 2017, 2018, 2019, and 2021.
• Considering the Net Change in Cash or the amount of leftover Cash, Home Depot has experienced fluctuations over the years, either gaining or losing. It is expected that they may recover in the next year to three years.
• Over the last 5 years, Lennar Corp has gradually experienced an increase in income. Additionally, it appears that they have acquired several subsidiaries and partnerships, resulting in a minority increase (Lennar Corp holds stakes in other smaller businesses). You can find a list of Lennar Corp's subsidiaries from the SEC here: https://www.sec.gov/Archives/edgar/data/920760/000093176303000421/dex21.htm
When examining the Liabilities to Asset Ratio, there seems to be a slight decrease over the years. The company has been steadily increasing its assets while maintaining a stable liability to asset ratio.
• The Liabilities to Equity Ratio appears to be stable. The minority interest in Equity seems to originate from subsidiaries that Lennar Corp owns.
• Looking at Lennar Corp's cash flow over the past 5 years, it does not seem to be consistent. It fluctuates between negative and positive cash flow. However, this could be attributed to their investment activities, such as mergers, acquisitions, and subsidiaries.
• Over the past 5 years, LGI Homes Inc. has experienced a gradual increase in income. Based on their income statement, it does not appear that they have any subsidiaries, as there are no minority interests shown. However, they may have acquired some smaller real estate building companies, which should be reflected in the Cash Flow Statement.
• There don't seem to be any long-term liabilities for LGI Homes Inc. All of their liabilities appear to be current (1 year or less).
• Their Liabilities to Asset and Liabilities to Equity ratios seem to be stable.
• Over the past 5 years, LGI Homes Inc. has had inconsistent cash flow. At year-end, they have experienced negative cash flow in the years 2018-2020, with the exception of 2017 and 2021.
• LGI Homes did appear to make some small acquisitions from smaller building companies.
• Over the past 5 years, Lowe's has appeared to be in a stable condition and has experienced consistent growth. However, in 2018, Lowe's did generate slightly lower earnings compared to the previous year in 2017, but it managed to recover in the subsequent years.
• Analyzing the Liabilities to Asset Ratio over the last 5 years, Lowe's has utilized a significant portion of their debt/liabilities to cover the cost of their assets, ranging from approximately 80% to 110%. In the year 2021, their liabilities exceeded their assets. While this may raise concerns, it doesn't necessarily indicate a negative outcome. It is possible that due to the nature of their industry, Lowe's requires additional debt to fund their assets and sustain their business operations.
• Observing the Liabilities to Equity Ratio over the past 5 years, Lowe's has experienced a gradual increase in this ratio. For instance, in 2017, for every $1 in Shareholder's Equity, the company owed $5.01. This figure rose to $8.47 in 2018, $19.02 in 2019, and $31.52 in 2020. As of 2021, the ratio turned negative due to liabilities surpassing assets.
• In 2017, Lowe's engaged in investment activities by acquiring Maintenance Supply Headquarters for approximately $509M-$512M. However, there were no further acquisitions or divestitures in the subsequent years (2018-2021). Aside from that, Lowe's appears to have maintained a steady flow of other investment activities.
• Lowe's has consistently paid dividends to its shareholders, with the dividend amount gradually increasing over the years.
• When examining the Net Changes in Cash, Lowe's has experienced both losses and gains in terms of cash flow over the years.
• NVR, Inc. appears to have a positive income statement over the past 5 years, with an increase in net income compared to previous years.
• It seems that NVR has not acquired or does not own any smaller businesses, as there is no minority interest shown in their income statement.statement.
• The Liabilities to Asset Ratio appears to be stable. NVR doesn't seem to heavily rely on liabilities to fund their assets, as they use approximately half of their liabilities for this purpose.
• The Liabilities to Equity ratio is also stable. However, their liabilities are almost equivalent to their debt, but not excessively so. They rely on debt for a little over 50% of their funding.
• NVR, Inc. has shown an increased amount of cash flow over the past 5 years, except for 2021. This could be due to factors such as repurchasing its own equity or repurchasing NVR, Inc. shares of stock.