Last Update 09 Dec 25

Fair value Decreased 4.55%

CCS: Buybacks And New Communities Will Support Steady Performance Ahead

Analysts have modestly reduced their price target on Century Communities from $66 to $63 per share, citing a current valuation that they view as reasonable to somewhat full.

Analyst Commentary

Bullish analysts highlight that Century Communities is executing well against its current strategy, with operational performance that supports the view that the shares are fairly valued on near term metrics.

They note that the stock’s recent appreciation appears aligned with fundamentals, suggesting limited downside risk in the absence of a major macro slowdown.

Bullish Takeaways

Valuation is seen as reasonable relative to peers, reflecting solid execution without excessive speculative premium.
Current pricing embeds a conservative outlook for growth, which could be exceeded if housing demand remains resilient.
Balance between community expansion and cost discipline supports the case that margins can be sustained at current levels.
The $62 to $63 price target range reflects analyst confidence that the company can maintain its current performance trajectory.

Bearish Takeaways

Bearish analysts caution that the stock is already trading at a somewhat full valuation, limiting upside in the near term.
Any deterioration in housing affordability or mortgage demand could quickly pressure volumes and challenge the current valuation.
Execution missteps in land acquisition or community rollouts could compress margins and undermine the case for multiple expansion.
The Neutral stance indicates that, without a clear catalyst for accelerated growth, the risk and reward profile may be balanced rather than compelling.

What's in the News

Narrowed 2025 guidance to 10,000 to 10,250 home deliveries and $3.8 billion to $3.9 billion in home sales revenue, reinforcing a more measured growth outlook (Corporate guidance)
Completed repurchase of 1,731,534 shares, or 5.67% of shares outstanding, for $108.25 million under the buyback program announced July 24, 2024, supporting EPS and shareholder returns (Buyback tranche update)
Accelerating national footprint with new Century Complete communities now selling or coming soon across multiple markets, including Jacksonville, Ocala, Riverside, Murrieta, Dallas Fort Worth, Houston, Sacramento, and Spartanburg (Product related announcements)
Expanding in key university and employment corridors with new communities near UC Davis, the University of Michigan, Eastern Michigan University, and major logistics hubs like Amazon and FedEx in Ocala Commerce Park (Product related announcements)
Launching large scale master planned projects such as the 318 acre Mirabella community near Houston, with over 1,000 planned homes and extensive amenities, signaling confidence in long term demand in high growth Sun Belt markets (Product related announcements)

Valuation Changes

Fair Value: Reduced modestly from $66 to $63 per share, reflecting a slightly more conservative assessment of upside.
Discount Rate: Lowered marginally from 9.44% to about 9.40%, implying a very small decrease in the perceived risk profile.
Revenue Growth: Held essentially flat at roughly 1.53% annually, indicating no material change in top line growth expectations.
Net Profit Margin: Kept almost unchanged at about 4.43%, signaling stable assumptions around profitability.
Future P/E: Trimmed from roughly 11.2x to 10.7x, pointing to a slightly less aggressive valuation multiple on forward earnings.

Weaker homebuyer demand, lower prices, and higher input costs are pressuring margins, sales, and profit outlooks amid challenging industry conditions.
Heavy reliance on entry-level buyers and concentrated markets increases vulnerability to affordability shifts and local economic downturns.
Strong operational efficiency, a growing community footprint, and a flexible land strategy position Century Communities for long-term growth despite ongoing affordability challenges in the housing market.

Catalysts

About Century Communities

Engages in the design, development, construction, marketing, and sale of single-family attached and detached homes.What are the underlying business or industry changes driving this perspective?

Ongoing elevated mortgage rates and affordability constraints are dampening homebuyer demand, forcing Century Communities to increase sales incentives and accept lower average selling prices, which is already putting downward pressure on gross margins and is expected to weigh further on both revenues and earnings in the coming quarters.
The company's reliance on price-sensitive entry-level buyers leaves it especially vulnerable to any further deterioration in affordability, shrinking the potential customer base and increasing the risk of slower sales volume and lower top-line growth.
Unit sales are trending below typical seasonal expectations and the company recently revised its full-year home delivery guidance downward, signaling that headwinds in demand could persist and result in weaker revenue growth than the market expects.
Supply cost inflation remains a concern, with the potential for higher lumber pricing due to possible Canadian tariffs and anticipated land inflation; these input costs may not be fully offset by direct cost reductions, likely compressing net margins over time.
Geographic concentration in certain cyclical markets (e.g., Texas, Mountain region) increases exposure to local economic slowdowns, creating risk of volatile and potentially lower revenues if regional conditions worsen.

Century Communities Earnings and Revenue Growth

Century Communities Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?

Analysts are assuming Century Communities's revenue will decrease by 1.9% annually over the next 3 years.
Analysts assume that profit margins will shrink from 6.0% today to 2.8% in 3 years time.
Analysts expect earnings to reach $114.5 million (and earnings per share of $4.01) by about September 2028, down from $260.0 million today. The analysts are largely in agreement about this estimate.
In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 16.9x on those 2028 earnings, up from 7.8x today. This future PE is greater than the current PE for the US Consumer Durables industry at 11.5x.
Analysts expect the number of shares outstanding to decline by 5.29% per year for the next 3 years.
To value all of this in today's terms, we will use a discount rate of 9.12%, as per the Simply Wall St company report.

Century Communities Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?

Persistent U.S. housing undersupply remains a powerful secular tailwind: Despite current affordability and demand headwinds from higher mortgage rates, management continues to highlight underlying demand for affordable new homes, supported by favorable demographic trends and solid household formation fundamentals. This suggests long-term top-line revenue support for Century Communities as new home inventory remains well below historical averages.
Community count growth sets a platform for scale and future sales expansion: The company has achieved a record community count (327 as of Q2), expects year-end increases in the mid-single digits, and maintains a significant lot pipeline (~70,000 lots owned/controlled). This expanding operational footprint provides a strong multi-year base for future home sales growth and associated revenue and earnings potential.
Improving construction cost control and cycle times enhance margin resilience: Century Communities managed to reduce direct construction costs year-over-year and sequentially (down 3% and 2%, respectively) and further improve average build cycle times (~4 months with room for additional gains). These operational efficiencies can help offset margin pressures from incentives or land inflation, supporting improving net margins and cash flow over time.
Share repurchases and disciplined capital allocation drive incremental shareholder value: The company has aggressively repurchased over 8% of its shares outstanding since 2024 at significant discounts to book value (Q2 buybacks at $54.35 versus $86.39 book value/share), and is maintaining a stable dividend, supporting per-share earnings growth and enhancing long-term total shareholder returns.
Flexible, land-light business model reduces risk and enhances adaptability: Century's approach to land acquisition (more traditional option agreements and renegotiations) is designed to provide flexibility to exit or renegotiate deals with minimal feasibility costs, which can help preserve balance sheet strength and support stable earnings growth over market cycles, even during industry downturns.

Valuation

How have all the factors above been brought together to estimate a fair value?

The analysts have a consensus price target of $59.5 for Century Communities based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of $70.0, and the most bearish reporting a price target of just $49.0.
In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be $4.1 billion, earnings will come to $114.5 million, and it would be trading on a PE ratio of 16.9x, assuming you use a discount rate of 9.1%.
Given the current share price of $67.94, the analyst price target of $59.5 is 14.2% lower.
We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

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Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

Earnings and Profit Margins Will Strengthen Despite Headwinds and New Buyback