GRBK

We rate Green Brick Partners, Inc. (GRBK) as a Reduce with a composite score of 46.9/100 at a current price of $78.19. The quantitative profile shows weakness across multiple dimensions, suggesting limited upside potential and elevated risk of underperformance relative to peers over the next 12 months.

The rating is primarily driven by strength in stability (80th percentile) and momentum (63th percentile), which together account for the majority of the composite score. Offsetting weakness in quality (27th percentile) and investment (32th percentile) tempers our overall conviction. We assign a Narrow Moat rating (57/100), Low uncertainty, and Exemplary capital allocation.

Key items to watch: whether strong momentum is fundamentally supported by revenue trends. Any material change in these dynamics could warrant a reassessment of our rating. The moat trend is stable, which suggests the competitive landscape is stable for now.

Green Brick Partners, Inc. holds a top-quartile position (#0 of 50) within the Construction sector, based on our composite quantitative scoring across quality, value, momentum, and stability factors. The composite score of 46.9/100 places it at rank #2496 in our full 7,333-stock universe. At $3.2B in market capitalization, Green Brick Partners, Inc. is a mid-cap player in the Construction space, which limits certain scale advantages but may allow for more agile strategic execution.

Despite positive momentum (63th percentile), revenue contraction of -11% creates a divergence between price action and fundamental trajectory. This divergence suggests either that the market is looking through near-term weakness or that technical factors are temporarily inflating the stock. Investors should assess whether the revenue decline reflects cyclical weakness or structural challenges.

The margin cascade tells an important story: gross margins of 32% (+7.8pp vs sector) narrow to operating margins of 22% (+14.2pp vs sector) and net margins of 17.0%, yielding a gross-to-net conversion rate of 54%. This efficient conversion suggests well-controlled operating costs and limited margin leakage between the gross and net levels.

At a current price of $78.19, Green Brick Partners, Inc. is trading near fair value based on current fundamentals. Our value factor score of 44/100 reflects a composite assessment across multiple valuation metrics including price-to-earnings, price-to-book, EV/EBITDA, and price-to-sales ratios relative to both sector peers and the broader market. Valuation metrics are mixed, with no strong signal of mispricing in either direction.

The stock currently trades at a P/E of 9.7x (a 49% discount to the sector median of 19.1x), EV/EBITDA of 8.3x (discounted to peers), P/B of 1.9x, P/S of 1.7x. The below-sector P/E suggests possible undervaluation or the market pricing in near-term headwinds.

We assign a Low uncertainty rating to Green Brick Partners, Inc.. The company exhibits strong financial stability with a beta of 0.64, conservative leverage (19% D/E), and a stability factor in the 80th percentile. The predictable nature of the business model and solid financial position reduce the range of potential outcomes, giving us confidence in our fair value estimate.

Specific risk factors that inform our assessment include: weak quality scores (27th percentile); low beta of 0.64 — while defensive, this may indicate limited upside participation in bull markets. Each of these factors independently widens the distribution of potential outcomes, and in combination they create a risk profile that demands careful position sizing. The stability factor at the 80th percentile and quality factor at the 27th percentile provide a quantitative summary of the overall risk landscape.

Key risk mitigants include: conservative leverage (19% D/E) limits balance sheet risk; above-average stability (80th percentile) suggests predictable business dynamics. These factors partially offset the identified risks and provide downside protection in adverse scenarios. On balance, the risk-reward profile is favorable for long-term investors.

We rate Green Brick Partners, Inc.'s capital allocation as Exemplary. Management demonstrates a strong track record of balancing reinvestment with shareholder returns, evidenced by returns on equity of 19.5%, disciplined leverage (19% D/E), best-in-class net margins of 17.0%. Exemplary allocators typically generate returns on equity above 20% while maintaining debt-to-equity below 50% — Green Brick Partners, Inc. approaches this high bar.

The balance sheet remains conservatively managed, providing financial flexibility for opportunistic investments while maintaining a margin of safety for shareholders. We note that the combination of 14.2% return on assets and controlled leverage suggests management is deploying capital at rates well above the cost of capital — the hallmark of exemplary stewardship.

In summary, Green Brick Partners, Inc. receives a Reduce rating with a composite score of 46.9/100 (rank #2496 of 7,333). Our quantitative framework assigns a Narrow Moat (57/100, trend: stable), Low uncertainty, and Exemplary capital allocation. The average factor score across quality, value, momentum, stability, and investment is 49/100.

Our analysis does not support a constructive view on Green Brick Partners, Inc. at this time. The combination of the current quantitative profile, low uncertainty, and exemplary capital allocation suggests unfavorable risk-reward at current levels. We recommend investors avoid new positions and existing holders consider reducing exposure.