Homebuilder Cyrela's Sales Rise 14% While Its Stock Sits Near a One-Year Low

3 Key Points

—Cyrela (CYRE3), Brazil's benchmark homebuilder, followed the launch surge The Rio Times reported earlier this week with the sales half of the story: net pre-sales of R$2.56 billion ($502M) in the second quarter, up 14% year over year, alongside 20 project launches worth R$3.84 billion ($753M) in Cyrela's share — a 34% jump — and roughly R$5 billion ($980M) including partners.

—The mid-market did the growing — mid-standard sales rose 22%, the low-income segment 4%, and high-end held flat — while the sell side turned louder: BTG Pactual sees 78% upside and, with Itaú BBA, reinforced its optimism after the preview; the average target on file sits near R$36 against a R$21.63 share price.

—The disconnect is the story: a company selling more homes than ever trades at 4.8x earnings, 0.78x book and 40% below its 52-week high, because every discounted cash flow in Brazilian real estate is hostage to the Selic — one caveat: this was an operational preview, so the actual profit print only arrives with August's financial statements.

Cyrela Sales Preview: What Happened