Analysis of Centex Corp.

Founded in 1950, Centex was ideally positioned to take advantage of the explosive growth in homebuilding that took place during the 1950s and 1960s. Building on that early success, Centex became a publicly traded company in 1969, and today employs more than 15,000 employees in 1,000 offices across the United States as well as in the United Kingdom ("About" 1). The company is divided into six major business units: home building, home services, financial services, contracting and construction services, construction products and investment real estate.

Within the residential construction industry, Centex has a variety of different product lines and brands. Centex Homes builds and sells homes

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industry's 20.20 percent, and Centex has a five-year average gross margin of only 8.61 percent (less than half the industry's level of 19.19 percent). However, the company performs well when comparing net income to the industry as a whole: although the company still falls below the industry, the difference is only one-half percentage point (4.95 net margin for the trailing 12-month period compared to the industry's 5.48 percent for the same period). On average, the company had net profit of 3.88 percent over the past five years compared to the industry's 4.96 average for the same period ("Ratio Comparison"). Competitive Positioning Despite its interests in other market segments (such as pest control), Centex is classified as being part of the construction services industry; this, in turn, is part of the capital goods sector. While this industry includes companies such as KB Home and Pulte (also homebuilders), it also includes companies such as Fluor, which engages in construction services around the world, but not in homebuilding. For the purposes of this analysis, Centex is compared against companies in the industry that are engaged in homebuilding. When viewed in this context, Centex is a significant participant in th
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