Company Overview: M.D.C. Holdings, Inc. is engaged in the business of homebuilding and financial services. The Company's segments include West, including segments located in Arizona, California, Nevada and Washington, and Oregon; Mountain, including segments located in Colorado and Utah; East, including segments located in the mid-Atlantic, which includes Virginia and Maryland, and Florida; mortgage operations, including HomeAmerican Mortgage Corporation, and Other, which includes Allegiant Insurance Company, Inc., Star American Insurance Ltd., American Home Insurance Agency, Inc. and American Home Title and Escrow Company.

As per our previous report published on MDC on 12^th April 2022, Kalkine provided a ‘Buy’ stance on the stock at USD 36.09 based on “upside indicated by valuation and key risks associated’, and the stock price has now moved by ~14.05% since then and the company has paid dividend for three times since our coverage. 

MDC’s Daily Chart

MDC’s Daily Price Chart. Source: REFINITIV, Analysis by Kalkine Group  

As the company turns into 2023, they face much different housing environment than the one that was in place at the beginning of 2022. The demand tailwinds the company enjoyed in 2021 in the first half of 2022 namely low mortgage rates and high consumer confidence turned against them in the second half of the year creating a much more difficult selling environment. Buyers became more cautious and the value proposition that homeownership presented became much less compelling through the combination of rapid home price appreciation and higher financing costs. These headwinds led to a sharp drop in new order activity and a big increase in cancellations in the third and fourth quarter, resulting in a much smaller backlog to start 2023 as compared to the beginning of 2022. Also, from technical standpoint, MDC shares have charted into an overbought zone as 14-day RSI hovering around 79.8, implies a potential pullback in the stock from the current trading level. Hence, a ‘Sell’ rating is assigned to “MDC” stock at the closing market price of USD 41.16 (as of February 02, 2023).  

Note: This report may be updated with details around fundamental and technical analysis, price/ chart in due course, as appropriate 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is February 02, 2023. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.’