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M.D.C. Holdings (MDC) engages in residential homebuilding and financial services businesses in the U.S. Its main homebuilding subsidiary is “Richmond American Homes.”
In 2006, MDC was one of the top 10 homebuilders in the U.S. However, since then, its sales have barely increased and its stock price has been more than cut in half.
As might be expected from a firm in the construction services industry, MDC’s sales are extremely volatile. Even more disturbing, its cash flow from operations is negative, and has been negative for roughly five years. On the positive side, its equity/assets ratio is 0.52, which is actually above where it has been historically. It looks like it has been able to achieve this because its cash flow from investment has been positive for roughly five years. This is very unusual. Normally cash flow from investment is negative.
Consequently, MDC is a risky company (beta = 1.65). Furthermore, most of its other fundamentals are, on balance, average. We rate this company’s overall fundamentals a C (fair), and we have a Hold recommendation on it.
Stat Sheet – M.D.C. Holdings, Inc.
|Market Cap||$ 1,211|
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