Brazil Building Homebuilders After the Rally Analyzing Election Cycle Positioning

Equity Research 16 September 2026 | 7:31AM BRT

BRAZIL BUILDING - HOMEBUILDERS

After the Rally: Analyzing Election Cycle Positioning

Our Take: Despite the recent rally, Cyrela trades at its lowest NTM P/E and widest Jorel Guilloty | earnings-yield spread versus 10-year nominal yields relative to comparable points in Goldman Sachs do Brasil CTVM S.A. prior election cycles. Direcional trades similarly (with a low P/E and high spreads) Igor Machado though share prices are at their lowest point in 18 months; our investor | conversations indicate a preference for peers such as Cury (which has one of the Goldman Sachs do Brasil CTVM S.A. highest P/E multiples) on its balance sheet and dividend. That said we remain constructive on Direcional shares given the outlook for net income growth. We remain Buy rated on Cyrela, Direcional, Cury and Tenda.

On the rally: Mid/High income homebuilders Cyrela and EZTEC, and highly levered low income homebuilder MRV, have seen significant rallies since the August lows, rising +27%, +28% and 37% vs Ibovespa and EWZ, which rose +12.5% and 11.5% in BRL (through the September 14 close). Tenda and Cury slightly underperformed at +10.3% and 8.9%, while Direcional reached a YTD low. The Brazilian election, with first round voting set to take place in approximately three weeks, is in focus. Accordingly, we wrote this note to understand how valuations of our coverage stocks are positioned relative to the same point in the previous three election cycles (2014, 2018, 2022). We used historical FactSet NTM consensus P/E multiples to assess how these stocks are trading relative to similar points in previous presidential election cycles from a Price to NTM consensus EPS multiple and an earnings yield spread perspective (NTM E/P net of 10 year nominal yields ). Our findings:

Cyrela: Despite the recent strongly rally, Cyrela trades at the lowest P/E multiple and the highest earnings yield spread relative to 10 year nominal yields when compared to previous cycles.

Direcional: Trades at the lowest multiples and highest yield spreads when compared to previous cycles; that said, Direcional has materially underperformed peers even during the rally, with shares are at their lowest point in over 18 months.

EZTEC: Following the rally, which we believe was aided in part by news of a potential lease-up of Esther Tower building, EZTEC trades at a tighter earnings yield spread than Cyrela. That said, spreads are still wider than in the 2018 and 2022 election cycles.

MRV: The company saw the strongest rally in the past month, albeit from a decade low price point. We note that despite the rally, MRV’s earnings yield spread is the

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