M.D.C. Shares Popped: What You Need to Know

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Denver-based homebuilder M.D.C. Holdings (NYS: MDC) were looking solid to investors today, as they boosted the stock as much as 11% in intraday trading before it closed with a 9.8% gain.

So what: What do you really expect out of a homebuilder right now? If you answered "not much," then it's easy to understand why M.D.C.'s not-quite-as-bad-as-expected fourth quarter led to such a big pop in its stock. For the quarter, the company managed a loss of "just" $0.40 per share on revenue of $247 million. On the bottom line, that's notably better than last year when the fourth quarter ended with a $0.65-per-share loss. It also topped the $0.46 loss that Wall Street analysts were expecting.

Now what: M.D.C. CEO Larry Mizel pointed out that if you ignore debt extinguishment and "land-related" charges, the company would have been profitable during the quarter. That's definitely a positive for a company in such a downtrodden industry, but an even bigger test of whether the company's efforts are paying off will come in the year ahead as M.D.C. looks to achieve full-year profitability. Wall Street analysts currently expect the company to notch a $0.57-per-share loss for 2012.

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