February 21, 2017

On Tuesday the S&P 500 rose another 0.6%, for a total gain of 5.6% this new year, and Toronto rose 0.5% for a total gain of 4.1% this year.

Melcor was down 3.5% today $15.11. But it is so thinly traded that one or two trades can push its price up or down several percentage points. When Melcor reports Q4 results they will likely be weak in terms of sales of home building lots. Its commercial income property revenue will likely show an increase. And I believe its commercial property development activities will likely have generated a profit. However, it is quite possible that it will book mark-market losses on the value of its commercial properties. It is also possible that it could book a loss in value on other development lands. However, in any case it seems certain that the book value per share (last reported at $29 per share) will remain far above the recent share price. The share price may react more to the company’s outlook for 2017 than its Q4 2016 results.

Toll Brothers will report its Q1 earnings before the opening of trading tomorrow (Wednesday). I am hopeful for continued sales and earnings growth. It just announced tonight that it will institute a small dividend. A dividend is neither a required nor a sufficient condition for a good investment. It is earnings that will ultimately drive shareholder returns. Still, the dividend will likely be good for the stock price in the short term. Toll Brothers announced yesterday that it was once again named the world’s most admired home building company in Fortune Magazine’s annual survey. The stock has not been a favorite of the investment community but will rise if it keeps growing its earnings.

Scroll to Top