J. M. Peters Reports Skyrocketing Sales for Second Quarter
Newport Beach home builder J. M. Peters Co. said Tuesday that Southern California’s exceptionally strong housing market pushed sales and earnings through the roof midway through its fiscal year.
For the second quarter ended Aug. 31, Peters reported housing sales of $86 million and profits of $7.3 million, up dramatically from last year’s sales of $18.6 million and profits of $336,000.
Through the first six months of this fiscal year, the company’s sales rose to $179 million from $75 million. Profits rose to $14.5 million from $2.5 million in the same period last year.
Last year the company had an unusually weak second quarter, which explains in part why this year’s gains look so strong.
Even so, the extraordinary jump in sales and profits this year shows a heavy demand for houses, particularly the more expensive and lavish homes that Peters builds.
“We have witnessed a tremendous surge in the demand for ‘move-up’ market housing,” Chairman James M. Peters said in a statement.
But how long the market will stay red-hot is uncertain, stock analysts say. Rising interest rates and higher prices may eventually push even many of Peters’ affluent customers out of the market.
“We’re on the backside of the peak in the housing market,” said Mark Matheson, an analyst for Newport Beach investment banker Cruttenden & Co.
Peters says its customers won’t be deterred by small increases in mortgage rates.
“If rates move up or down one percentage point, that doesn’t make or break our buyers’ ability to purchase,” said Brian K. Theriot, the company’s director of investor relations.
But another analyst is skeptical.
“Home building is a very cyclical business,” said Jon Fosheim, president of Green Street Advisors, a Newport Beach research firm specializing in publicly held real estate companies. “While a downturn in the economy hurts low-income buyers most, it will also affect more affluent customers.
“Companies at the high end of the market like Peters may not feel a downturn as much, but they will definitely feel it.”
Peters builds from Ventura County to San Diego County. Only about 13% of the company’s stock--or 13.8 million shares--is traded publicly. The rest is owned by a unit of Southmark Corp., a Dallas financial services and real estate company that bought Peters in 1985.
