Curb Appeal: Brands Boosted by Rising Demand for the Suburban Life | TiiCKER

Curb Appeal: Brands Boosted by Rising Demand for the Suburban Life

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Jeff Tryka March 12, 2021
suburban home

It’s no surprise that urban residents have been relocating from certain cities in favor of neighboring suburbs either to escape congestion or find more affordable and/or spacious housing generally unavailable in city centers. With more employees working from home these days, the convenience of living in an urban center is not as enticing as in the past, according to the National Association of Realtors.

In fact, about 20% of employees no longer make the daily commute, which adds up to more than 28 million Americans now working from home. As a result, real estate markets are heating up in many suburban areas, creating greater demand for home improvements, both inside and out. Let’s take a look at those benefiting from an increase in demand for suburban life.

Cavco Industries, Inc. (Tii:CVCO)

A leading designer and builder of systems-built structures, including manufactured homes, modular homes, commercial buildings, park model RVs, and vacation cabins, Cavco has seen extraordinary demand for its products. Sales order activity remained exceptionally strong during the company’s fiscal third quarter of 2021 to the point where home sales order rates were nearly 65% higher than the comparable prior-year quarter. Strong demand and higher home selling prices contributed to a 5.5% increase in net revenue for the quarter.

Cornerstone Building Brands, Inc. (Tii:CNR)

Saving on energy costs will have homeowners looking for ways to update their homes without significantly impacting the curb appeal. Cornerstone Building Brands, the largest manufacturer of exterior building products, experienced sales gains for its Windows and Siding segments. These gains, however, were offset by delays in construction activity and shifts in product mix due to the COVID-19 pandemic. Despite this, the company extended its Connecting Communities initiative, which helps build affordable housing with families during the COVID-19 pandemic. Cornerstone expects a rebound this year, predicting strong revenue growth from a robust single-family housing outlook.

Ethan Allen Interiors Inc. (Tii:ETH)

Though known for their interior décor, Ethan Allen offers a robust line of outdoor lounge and dining chairs, sofas, fire tables and outdoor accessories. At a time when consumers are looking to entertain outdoors, decks and patios may increasingly become the centerpiece of the suburban home. Consolidated net sales increased 2.4% to $178.8 million for Ethan Allen’s fiscal 2021 second quarter ended December 31, 2020. The sales increase was partially due to strong performance from the company’s retail segment and e-commerce business, which was up 44.9%, creating a record-high order backlog at quarter-end.

Sun Communities, Inc. (Tii:SUI)

While COVID-related shutdowns and work-from-home mandates slammed many of those Real Estate Investment Trusts (REITs) focused on retail and office properties, residential REITs not concentrated in urban areas fared somewhat better. Sun Communities, Inc. reported that total manufactured home and annual RV occupancy was 97.3% on December 31, 2020, compared to 96.4% at the same point the prior year. A fully integrated REIT that owns and operates or has an interest in 552 manufactured home, RV and marina properties, Sun’s total revenues for 2020 increased 10.6% to approximately $1.4 billion.

JELD-WEN Holding, Inc. (Tii:JELD)

Replacing windows and doors is a popular way to spruce up a home’s curb appeal while boosting energy efficiency. In fact, the doors and windows market in North America is predicted to realize an absolute growth of over 26%, with incremental revenue growth of around $14 billion between 2020 to 2026, according to research solutions provider Arizton Advisory and Intelligence. In the report, Arizton cited rising demand for home renovation activities driving the market. A leading manufacturer of windows, interior, exterior and patio doors, JELD-WEN also expects increased housing demand to result in net revenue growth of 4-7% for fiscal 2021.

Masco Corporation (Tii:MAS)

A provider of indoor and outdoor home improvement products, Masco Corp., is also riding the home improvement wave. With more than 30 brands under its umbrella that includes Behr paint, Delta and Hansgrohe faucets, bath and shower fixtures, Kichler decorative and outdoor lighting and HotSpring spas, Masco reported a 7% increase in 2020 sales on robust fourth-quarter demand. With anticipated strong demand for its products, Masco expects 2021 adjusted earnings per share to range from $3.25 to $3.45 per share.

As long as this new urban flight to the suburbs continues – and interest rates remain low – the nation’s homebuilders, who experienced a faster than expected recovery over the last year, may well continue their upward trend.

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