$23.00
$100.00
bear $23.00
base $60.00
bull $100.00
margin of safety $33.00
market price* $54.59
Century Communities is one of the largest US homebuilders. In 2025 it delivered 10,387 new homes at an average price of about $378,000, across five homebuilding segments (West, Mountain, Texas, Southeast and the entry-level Century Complete brand), and it also earns fees from mortgage, title and insurance services for its buyers. About 94% of its 2025 deliveries were priced below Federal Housing Administration loan limits, so it sells mainly to entry-level and first-time buyers. How we measure earnings. We start from operating cash flow, remove the swings from building and selling homes (land and home inventory, mortgage loans held for sale, payables), subtract stock-based compensation as a real cost, and deduct the part of equipment spending needed just to stay in business. For a homebuilder this lands close to net income plus non-cash charges such as inventory impairments and lot-option abandonments, minus routine capital spending. On this basis earnings per diluted share were roughly $4.22 in 2019, $6.32 in 2020, $15.05 in 2021, $16.79 in 2022, $7.59 in 2023, $9.89 in 2024 and $5.49 in 2025. The 2021 and 2022 figures came in a period of very strong pricing and cheap mortgages, and we do not treat them as normal. The median of 2023 to 2025 is $7.59, but we do not use it as the current level, for the reason below. Why the level is lower now. Homebuilding gross margin fell from 21.5% in 2024 to 17.6% in 2025 because of higher buyer incentives, and revenue slipped from $4.40 billion to $4.12 billion. Net income dropped from $333.8 million to $147.6 million. The trend has continued: in the first half of 2026 revenue was $1.72 billion (versus $1.90 billion a year earlier) and net income was $60.6 million (versus $74.2 million). Backlog at the end of 2025 was 789 homes worth $283.7 million, down from 850 homes and $351.2 million a year earlier, with the average backlog price down 13%. Six quarters of weaker margins is enough for us to conclude the 2024 level no longer describes the business. Owner earnings per share fell about 44% in 2025 (from $9.89 to $5.49). We assume a further, smaller step down to about $4.75 per share, not a rebound; the 2025 result already carries a full year of the higher incentives, and first-half 2026 profit was about 18% lower still. We identified nothing dated in the filings that would reverse this, so no recovery is assumed. Base case: about $60 per share. Earnings hold at roughly $4.75 per share for twenty years, then fade to zero over the following ten. We credit no growth. Housing demand, land and lot supply, and share repurchases ($143.6 million of stock bought back in 2025) could add to per-share earnings, but each depends on markets or decisions that have not yet happened, so they are left out. The company has built and sold homes continuously and delivered over 10,000 homes a year, which is why we allow the earnings to persist for decades before fading. Bear case: about $23 per share. Margins keep compressing, as the falling backlog value and price suggest, and earnings settle near $2.50 per share for ten years, then fade to zero over the next ten. Debt sharpens this outcome: the company holds $500 million of 3.875% notes due 2029 and issued $500 million of 6.625% notes due 2033 in September 2025 to replace 6.75% notes due 2027, so refinancing the 2029 notes at current rates would raise interest costs. It also recorded inventory impairments of $21.8 million and lot-option abandonments of $11.2 million in 2025, and further write-downs are plausible if prices fall. Bull case: about $100 per share. Earnings recover to about $8.00 per share, the median of 2023 to 2025, a level the company has already reached in the current interest-rate environment. That level lasts twenty years and then fades over ten. This requires incentives and margins to move back toward 2024 conditions through the company's own pricing and cost control, not a market boom. What we tested. We challenged the base case against first-half 2026 results. Net income of $60.6 million is roughly half of last year's $147.6 million full-year total, and first-half profit was 50% of the full-year total in 2025, so an annualised run rate near $120 million (about $4 per share) supports a base level below the 2025 figure rather than at it. We reduced the base level accordingly. Home-selling seasonality, the financing contingency in customer contracts, and the concentration of risk in Colorado, Texas and Nevada weather and natural hazards are additional exposures noted in the filing. Accounting notes. Building inventory is treated as working capital, not as a cost, because the company replenishes lots each year and this is the standard for a homebuilder; steady flat volumes need little net inventory growth. Debt is not subtracted separately, because interest is already paid out of the cash flow we start from; leverage is reflected only in the bear case. The most recent annual report is for fiscal 2025 and the latest quarterly report on record is for the period ended June 30, 2026.