Comstock Holding Cos., Inc. :CHCI-US: Earnings Analysis: Q3, 2017 By the Numbers : November 20, 2017

Comstock Holding Cos., Inc. reports financial results for the quarter ended September 30, 2017.

We analyze the earnings along side the following peers of Comstock Holding Cos., Inc. – A V Homes Inc and MRV Engenharia e Participacoes S.A. Sponsored ADR (AVHI-US and MRVNY-US) that have also reported for this period.

Highlights

  • Summary numbers: Revenues of USD 13.82 million, Net Earnings of USD -1.51 million.
  • Gross margins narrowed from 11.62% to 9.17% compared to the same period last year, operating (EBITDA) margins now -8.28% from -5.84%.
  • Year-on-year change in operating cash flow of 107.59% is about the same as the change in earnings, likely no significant movement in accruals or reserves.
  • Narrowing of operating margins contributed to decline in earnings.

The table below shows the preliminary results and recent trends for key metrics such as revenues and net income (See complete table at the end of this report):

2017-09-30 2017-06-30 2017-03-31 2016-12-31 2016-09-30
Relevant Numbers (Quarterly)
Revenues (mil) 13.82 10.52 10.27 8.79 13.1
Revenue Growth (%YOY) 5.43 5.43 5.79 -66.45 6.63
Earnings (mil) -1.51 0.39 -0.65 -4.31 -1.05
Earnings Growth (%YOY) -44.36 120.27 62.47 -150.09 4.12
Net Margin (%) -10.93 3.68 -6.3 -49.06 -7.98
EPS -0.45 0.11 -0.22 -1.32 -0.34
Return on Equity (%) -40.27 7.54 -10.17 -80.03 -84.77
Return on Assets (%) -10.8 2.76 -4.45 -29.65 -8.05

Access our Ratings and Scores for Comstock Holding Cos., Inc.

Market Share Versus Profits

Revenues History
Earnings History

CHCI-US’s change in revenue this period compared to the same period last year of 5.43% is almost the same as its change in earnings, and is about average among the announced results thus far in its peer group, suggesting that CHCI-US is holding onto its market share. Also, for comparison purposes, revenues changed by 31.32% and earnings by -490.18% compared to the immediate last period.

Revenues Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Leader, Earnings Focus, Laggard, Revenues Focus

Earnings Growth Analysis

The company’s year-on-year decline in earnings was influenced by a weakening in gross margins from 11.62% to 9.17%, as well as issues with cost controls. As a result, operating margins (EBITDA margins) went from -5.84% to -8.28% in this time frame. For comparison, gross margins were 14.49% and EBITDA margins were -5% in the previous period.

Gross Margin Versus EBITDA Margin

Quadrant label definitions. Hover to know more

Differentiated; Low Cost, Commodity; Low Cost, Commodity; High Cost, Differentiated; High Cost

Cash Versus Earnings – Sustainable Performance?

It is important to examine a company�s cash versus earnings numbers to gauge whether its performance is sustainable.

Operating Cash Flow Growth Versus Earnings Growth

Quadrant label definitions. Hover to know more

Cash Flow based Earnings, Likely Non-cash Earnings, Low Cash Flow Base, Likely Undeclared Earnings

CHCI-US’s change in operating cash flow of 107.59% compared to the same period last year is about the same as its change in earnings this period. Additionally, this change in operating cash flow is about average among its peer group. This suggests that the company did not use accruals or reserves to manage earnings this period, and that, all else being equal, the earnings number is sustainable.

Margins

The company’s decline in earnings has been influenced by the following factors: (1) Decline in operating margins (EBIT margins) from -6.52% to -8.64% and (2) one-time items that contributed to a decrease in pretax margins from -5.77% to -8.48%

EBIT Margin Versus PreTax Margin

Quadrant label definitions. Hover to know more

Operation driven Earnings, One-time Favorables, Low Earnings Base, One-time Unfavorables
EBIT Margin History
PreTax Margin History

Access our Ratings and Scores for Comstock Holding Cos., Inc.

Company Profile

Comstock Holding Cos., Inc. engages in the development of real estate properties and provision of asset management services. It operates through the following segments: Homebuilding, Multi-Family and Real Estate Services. The Homebuilding segment develops properties with the intent to sell as fee-simple properties or condominiums to individual buyers or to private or institutional investors. The Multi-Family segment focuses on projects ranging from 75 to 200 units in locations that are supply constrained with demonstrated demand for stabilized assets. The Real Estate Services segment comprises of projects in all aspects of real estate management such as strategic planning; land development; entitlement; property management; sales and marketing; workout and turnaround strategies, financing and general construction. The company was founded by Christopher Clemente in 1985 and is headquartered in Reston, VA.

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