ROIC
11%low FY2025
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SDHC, Smith Douglas Homes Corp.
Homebuilders capital-intensive
We are engaged in the design, construction, and sale of single-family homes in some of the highest growth and most desirable markets in the Southeastern and Southern United States.
With the goal of becoming one of the most dominant homebuilders in the Southeastern and Southern United States, we intend to grow operations within our existing footprint and to expand into new markets where we can most effectively implement our business strategy and maximize our profit and returns.
We utilize a single database enterprise resource planning ("ERP") system called SMART Builder, which we exclusively license from an entity affiliated with the Founder Fund and that is fully integrated with our homebuilding operations.
The business
What it sells, where the money comes from, the kind of company it is.
Revenue · FY2025
$971M
−0.4% YoY
Vital signs · TTM, with 3-yr average
Revenue $953M 3-yr avg $904M
Revenue $206M −8.1% vs yr-ago qtr
Net income $4M yr-ago $19M
Net margin 2.0% yr-ago 8.3%
The business in brief
read the 10-K →What this business is and what moves its needle, from its own SEC filings.
- What moves the needle
- Gross margin has run about 26% and operating margin about 2.4% through the cycle, a solid spread between what it charges and what the product costs to make. The operating margin has swung widely — from 1.7% to 16% — on a steadier 26% gross margin, so what moves it sits below the gross line, in operating spend and one-off charges more than in the cost of the product itself. On its own account, the filing leans hardest on pricing power & competition, set against the numbers in what the filing emphasizes, below.
- Is it a good business?
- Return on capital has run high across the record (median 33%, above 15% in 2 of 3 years), though buybacks and expensed R&D and brands shrink the capital base, so the figure overstates the underlying economics. Owner earnings, the cash-based check, have been thin too. Whether these returns reflect real pricing power or an accounting artifact is the judgment the 10-K is for.
Every line is arithmetic on the company's filings, shown in full in the sections below.
The record
Ten years of arithmetic, read across the cycle.
The record, 2023–2025
realized figures from each filing · older years to the left| 2023’23 | 2024’24 | 2025’25 | TTMTTMMar 2026 | |
|---|---|---|---|---|
| Income statement | ||||
| $765M | $975M | $971M | $953M | RevenueRevenue |
| 28% | 26% | 22% | 21% | Gross marginGross mgn |
| 12% | 14% | 14% | 15% | SG&A / revenueSG&A/rev |
| $125M | $24M | $16M | $14M | Operating incomeOp. inc. |
| 16.3% | 2.4% | 1.7% | 1.5% | Operating marginOp. mgn |
| $123M | $16M | $11M | $9M | Net incomeNet inc. |
| 0% | 24% | 19% | 18% | Effective tax rateTax rate |
| Cash flow & returns | ||||
| $76M | $19M | ($31M) | $4M | Operating cash flowOp. cash |
| $1M | $2M | $3M | $3M | DepreciationDeprec. |
| ($48M) | ($3M) | ($48M) | ($12M) | Working capital & otherWC & other |
| $1M | $4M | $6M | $5M | CapexCapex |
| 0.2% | 0.4% | 0.6% | 0.5% | Capex / revenueCapex/rev |
| $75M | $17M | ($34M) | $986K | Owner earningsOwner earn. |
| 9.8% | 1.8% | −3.5% | 0.1% | Owner earnings marginOE mgn |
| $75M | $15M | ($37M) | ($1M) | Free cash flowFCF |
| 9.8% | 1.6% | −3.8% | −0.1% | Free cash flow marginFCF mgn |
| $76M | $0 | — | $0 | AcquisitionsAcquis. |
| 47% | 33% | 11% | 9% | ROICROIC |
| 59% | 22% | 12% | 10% | Return on equityROE |
| 59% | 22% | 12% | 10% | Retained to equityRetained/eq |
| Balance sheet | ||||
| $20M | $22M | $13M | $28M | Cash & investmentsCash+inv |
| $26M | $26M | $26M | $26M | GoodwillGoodwill |
| $353M | $476M | $558M | $600M | Total assetsAssets |
| $76M | $3M | $44M | $69M | Total debtDebt |
| $56M | ($19M) | $31M | $41M | Net debt / (cash)Net debt |
| 75.3× | 9.5× | 5.1× | 4.1× | Interest coverageInt. cov. |
| $209M | $74M | $87M | $82M | Shareholders’ equityEquity |
| 0.0% | 0.4% | 0.4% | 0.4% | Stock comp / revenueSBC/rev |
| Per share | ||||
| — | 9.1M | 9.2M | 9.1M | Shares out (diluted)Shares |
| — | $107.64 | $105.40 | $105.25 | Revenue / shareRev/sh |
| — | $1.77 | $1.16 | $0.95 | EPS (diluted)EPS |
| — | $1.91 | $-3.68 | $0.11 | Owner earnings / shareOE/sh |
| — | $1.68 | $-4.00 | $-0.12 | Free cash flow / shareFCF/sh |
| — | $0.43 | $0.60 | $0.56 | Cap. spending / shareCapex/sh |
| — | $8.13 | $9.41 | $9.06 | Book value / shareBVPS |
The record, charted
FY2023–2025Each measure over its full record; the current point and the worst year marked.
Gross margin
22%low FY2025
Owner earnings vs. net income
Owner earningsNet incomeThe accountant's number, and the cash an owner can take; the gap is the tell.
($34M)owner earningsvs.$11Mnet incomelow FY2025
Net income is the accountant's number; owner earnings is the cash an owner could take out. The walk between them, off the cash-flow statement, and whether the gap is widening or holding.
In fiscal 2025 the business earned ($34M) of owner earnings, the operating cash left after the $3M it takes just to hold its position. It put $3M more into growth; free cash flow, after that spending, was ($37M).
| FY2025 | FY2024 | FY2023 | |
|---|---|---|---|
| Reported net income | $11M | $16M | $123M |
| Depreciation & amortizationnon-cash charge added back | +$3M | +$2M | +$1M |
| Stock-based compensationreal costnon-cash, but a real cost | +$4M | +$4M | — |
| Working capital & othertiming of cash in and out, other non-cash items | −$48M | −$3M | −$48M |
| Cash from operations | ($31M) | $19M | $76M |
| Maintenance capital expenditurethe spending needed just to hold position and volume | −$3M | −$2M | −$1M |
| Owner earnings | ($34M) | $17M | $75M |
| Growth capital expenditurediscretionary; spent to get bigger, not to stand still | −$3M | −$2M | — |
| Free cash flow | ($37M) | $15M | $75M |
| Owner-earnings marginowner earnings ÷ revenue | -3% | 2% | 10% |
Owner earnings is the cash an owner could pull out without starving the business: operating cash less the maintenance capital it must spend to hold its position (here about $3M, roughly its depreciation, the rate its assets wear out). The other $3M of its capital spending is growth it chose, not upkeep it owed; charged only with the maintenance it must do, the business earns well more than the year's free cash flow shows. The cash-flow statement also adds stock comp back as non-cash, but it is a real cost paid in shares; counted as the expense it is (less $4M), owner earnings is nearer ($38M).
Much of fiscal 2025's profit didn't arrive as operating cash; it sits in “working capital & other” above. That can be a real inventory or timing swing, or profit that doesn't run through operating cash at all: a heavy tax year, equity-method earnings, or investment income booked through investing. For a year like this, owner earnings understates the cash earned; the full cash-flow statement carries the rest.
Maintenance capex is estimated as depreciation where a growing business invests above it; free cash flow is the figure the scorecard's free-cash margin reads.
Quality & stewardship
Returns, the balance sheet, capital allocation, and pay.
Owner’s Scorecard
FY2025 10-K · source on SEC EDGAR →
Will it survive?
- ComfortableOperating income $16M ÷ interest expense $3M
What this means
Operating profit covers interest with the kind of margin Graham wanted for a defensive holding. Necessary, not sufficient, it says solvent, not cheap.
- How heavy is the debt, net of cash? $31M · 1.9× operating profitModest net debtCash $13M − debt $44M
What this means
Netting $13M of cash and short-term investments against $44M of debt leaves $31M owed, about 1.9× a year's operating profit (2.7× on the gross debt, before the cash). Net debt is the leverage figure that matters: the cash is already set against the debt. Strategic or illiquid investments aren't counted here.
- Not enough data
What this means
The filing data didn't include the inputs for this check.
Is it a good business?
- Very high (≥25%) through the cycle3-yr median, range 11%–47%; 11% latest = NOPAT $13M ÷ invested capital $118MIndustry peers: median 11%
What this means
The rate the business earns on the money tied up in it, Buffett's north star, because over time a stock tracks the ROIC beneath it. Above ~15% sustained hints at a moat; a return below the cost of capital (~8%) erodes value as a business grows rather than building it — the test Buffett weighs most. The headline is the median of the last 3 years (it ran 11% most recently), so one peak or trough year doesn't set the verdict. Asset-light businesses (R&D expensed, little capital) read artificially high, pair this with Owner Earnings.
- Thin through the cycle3-yr median margin, range -3%–10%; latest ($34M) = operating cash ($31M) − maintenance capex $3MIndustry peers: median 3%
What this means
What an owner could take out without starving the business: operating cash less the maintenance capital it must spend to hold its position — Buffett's owner earnings. That's -3% of revenue this year, a 2% median across 3 years. Treating stock comp as the real expense it is (less $4M of SBC) leaves ($38M).
- Are earnings backed by cash? -2.93×Thinly cash-backedCash from ops ($31M) ÷ net income $11M
What this means
How much of reported profit showed up as operating cash. Above 1× is reassuring; well below suggests earnings lean on accruals. One year is noisy, growth and working-capital swings distort it, and this is operating cash, not free cash. Watch the multi-year trend.
How is the cash used?
- Not enough data
What this means
The filing data didn't include the inputs for this check.
- Investing or harvesting? 2.17×ExpandingCapex $6M ÷ depreciation $3M
What this means
Descriptive, not a grade. Above ~1× means investing faster than assets wear out (growth, or, sustained for years, today's earnings carrying less depreciation than tomorrow's will). Below means spending less than it's wearing out (efficiency, or a melting asset base). The ratio won't tell you which; the filings will.
Graham’s defensive tests · 0 of 1 met
Graham’s numerical criteria for the defensive investor (The Intelligent Investor, ch. 14), run on the filings. A floor of safety, not a buy signal; many fine modern businesses fail his strictest liquidity rules by design.
- Adequate size MissRevenue ≥ $2B · $971M
What this means
Big enough to weather a storm. Graham's 1972 floor was ~$100M of sales (≈ $700M today); we use a $2B revenue line as a conservative modern stand-in.
- Strong liquidity —Current ratio ≥ 2× · —
What this means
Current assets / liabilities not in the data yet.
- Moderate price —P/E ≤ 15 and P/E × P/B ≤ 22.5 · decided by the price
What this means
Graham's valuation gate, the wall he kept between a sound business and a sound investment. Three-year average earnings are $5.52/share (latest year $1.18), the averaged base the calculator's gate runs on, and book value is $9.58/share. Enter a price in “What the price implies” just below for the P/E, P/B, and whether it clears. But this is the rule Buffett outgrew: there's no hard P/E law, and a wonderful business can deserve a far richer multiple if the thesis holds, treat it as the bargain-hunter's floor, not a verdict on the price.
Does AI threaten the moat?
Low contestabilityThe moat is physical, regulated or balance-sheet-funded, the kind AI cuts costs within but does not contest.
In its own filing Raised, but not as a competitor
The filing raises AI among its risks, but in other terms (security, regulation, energy or the like), not as a competitor to its product.
AI is unlikely to contest a moat that is physical, regulated or balance-sheet-funded; here it reads more as a cost tool than a threat.
Read from the filing's own risk factors, paired with the industry's structure under its SIC code; the durability is read above, the price below.
All figures as filed; the source filing is linked above.
Management, ownership & pay
read the proxy →From the proxy: how much of the business the people running it own, and how they are paid.
- Insider ownership4%
The stake all directors and executive officers hold together, per the 2026 proxy: skin in the game, the first thing Munger reads.
- Stock-based compensation$4M
The slice of the business handed to employees in shares this year, 0% of revenue, equal to 22% of operating profit. Buffett's oldest accounting fight: this is compensation, compensation is an expense, real whether or not the headline earnings admit it. One trap: the cash-flow statement adds SBC back, so the operating cash, and the owner earnings drawn from it, are flattered by exactly this amount; counted as the cost it is, what an owner keeps is lower.
What an owner would ask, FY2025
read the 10-K →- Which reported numbers are a judgment call?Management names Income taxes as critical estimates
each rests partly on management's judgment; the filing's note sets out the assumptionsverify →
The questions the record and the charts do not answer on their own; each carries the figure and the place to look.
Peers, Homebuilders
The same industry, side by side on owner economics. Each figure is a through-cycle median, so a peak or trough year can’t distort it; the group median at the foot is the line to read each against.
| Company | Revenue | Gross margin | Op. margin | ROIC | Owner earn. margin |
|---|---|---|---|---|---|
| DFHDream Finders Homes Inc. | $4.3B | 16% | 7.8% | 41% | 3% |
| CCSCentury Communities Inc. | $4.1B | — | 7.9% | 6% | -1% |
| ECGEverus Construction Group Inc. | $3.7B | 12% | 6.7% | 29% | 4% |
| HOVHovnanian Enterprises Inc. | $3.0B | — | 1.8% | 3% | 7% |
| BZHBeazer Homes USA Inc. | $2.4B | 16% | 3.9% | 5% | 3% |
| GRBKGreen Brick Partners Inc. | $2.0B | 26% | 15.8% | 15% | -0% |
| LGIHLGI Homes Inc. | $1.7B | 25% | 13.3% | 11% | -7% |
| SDHCSmith Douglas Homes Corp. | $971M | 26% | 2.4% | 33% | 2% |
| Group median | — | 21% | 7.2% | 13% | 2% |
The price
What a price has to assume.
What the price implies
reverse-DCFType today's close and see the owner-earnings growth you'd have to believe to justify it, beside what Smith Douglas Homes Corp. has delivered.
Smith Douglas Homes Corp.’s latest year shows negative owner earnings, the mark of a build-out: total capital spending outruns the cash the business throws off today. So the tool opens on the steady-state base (maintenance capex in place of the build-out spend), the cash it would earn at rest; clear the toggle below to read the latest year exactly as reported.
$
Base
—
The assumptions
9.0% = the 4.55% 10-year Treasury (Jul 15, 2026) + 4.45 points of equity premium. The rate you require is yours to set.
Enter a price above to run it.
A dated snapshot of the price you typed, the assumptions you set, and what the page showed for them. A snapshot is never edited after it is saved. Your notebook is yours alone — the commitment states what is stored and what we will never do.
Implied by the price—
Owner-earnings growth, delivered—
Owner-earnings growth, delivered—
Owner-earnings yield—
What a growth belief costs, in multiples
The growth each return requires, at your price
P/E (3-yr earnings ’23–’25)—
P/B—
Graham’s price gate—
Graham capped the multiple at 15×; Buffett and Munger let that rule go: a wonderful business can deserve 50× if the thesis holds. The gate marks the bargain-hunter's floor.
Against a high-grade bond: Graham’s yardstick bond yield%
Prefilled with the 10-year Treasury (4.55%, as of Jul 15, 2026). Edit it for today’s exact figure, or a AAA corporate yield.
Graham measured a stock against the bond you could own instead, the heart of his margin of safety. Enter a price above to weigh the owner-earnings yield against this bond.
Owner-earnings yield—
High-grade bond yield—
Margin over the bond—
Free cash flow ($1M) on 9M shares outstanding (a weighted basic average, the only count this filer tags); net debt $41M. The base opens on the steady-state figure (the latest year is negative on total capex mid-build-out); clear Steady-state to use the year as filed. Net of stock comp treats option pay as the expense it is. Capex ($5M) runs well above depreciation ($3M), so this is a build-out; Steady-state swaps total capex for maintenance (≈ depreciation), lifting the base to about $1M, the cash it would throw off if it stopped expanding. The dials set the multiple a growth belief justifies; the price, and every dollar on this page, is yours.
Cite: Owner Scorecard, "Smith Douglas Homes Corp. (SDHC), the owner's record," https://ownerscorecard.com/c/SDHC, data as of 2026-07-09.
Manual order: ← SDGR its page in the Manual SDRL →
Industry order: ← PHM the Homebuilders chapter SKY →