Forestar Q1 Earnings Preview: FOR Up 20.2% Since Last Report

in EARNINGS/INVESTING IDEAS by

Forestar Group Inc. (NYSE:FOR) is scheduled to report Q1 earnings results on January 23, 2020, after markets close for trading. Webcast details can be found here.

The company is expected to report earnings of $0.15/share on revenue of $167 million. The consensus earnings per share (EPS) of $0.15/share is based on a poll of 5 analysts and represents a growth of 87.5% over the same quarter last year when the company reported earnings of $0.08/share.

The revenue forecast of $167 million based on a poll of 4 analysts implies a year-over-year (YoY) growth of 333.8%. Last year the company reported $38.5 million in revenue for the quarter.

Expected to report EPS growth of $0.07/share for Q1, 2019
Metric Expected Prior Year YoY Change
Revenue $167.00 $38.50 333.8%
EPS $0.15 $0.08 87.5%

Earnings Call Trends

Management has been great at managing analyst expectations historically. The company has a perfect record over the last 3 tracked quarters of exceeding earnings guidance.

What are your expectations from Forestar for earnings this quarter? Let us know in the comments!

Analyst Expected vs. Reported EPS
Quarter Expected Reported Surprise Result
Q4, 2019 $0.10 $0.30 215.8% Beat
Q3, 2019 $0.07 $0.16 113.3% Beat
Q2, 2019 $0.09 $0.24 166.7% Beat

In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending September 30, 2019, the stock price reacted by increasing by 3.2%.

Stock Price Performance After Earnings
Report Date Price Day Prior Price Next Day Change % Result
2019-11-07 $18.85 $19.45 3.2% Increase
2019-07-25 $20.03 $20.64 3.0% Increase
2019-04-25 $18.99 $19.14 0.8% Increase
2019-02-06 $16.71 $17 1.7% Increase

Fundamentals And Technical Analysis

Forestar is currently trading at $22.64/share, up 2.0% for the day. The company is trading at approximately 98.4% of its 52-week high of $23/share. The company’s stock price is up 16.4% since the last earnings report and up 14.0% over the previous week.

NYSE:FOR Stock Price Chart Source: Finbox

The company’s 14 Day Relative Price Index (RSI) of 68.24 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.

The current share price implies a price-to-earnings (P/E) multiple of 29.3x and a forward P/E multiple of 23.0x. Forestar’s current share price also implies a price-to-book (P/B) multiple of 1.3x. The following table summarizes some other key fundamental ratios:

Data as of January 21, 2020
Metric Value
Last Fiscal Period FY2019.Q4
Period End Date September 30, 2019
Stock Price (Current) $22.64
P/E Ratio 29.3x
P/E Ratio (Fwd) 23.0x
PEG Ratio 0.4
Total Debt to Capital (%) 30.2%
Levered Free Cash Flow -$392.1 million
Enterprise Value / EBITDA 25.9x

Source: Finbox

Company Profile: Forestar Group Inc.

Forestar Group Inc. is a small-cap stock with a market capitalization of $1.065 billion and a total enterprise value of $1.144 billion. The company operates in the Real Estate sector and the Real Estate Management & Development industry.

Forestar Group Inc. operates as a real estate lot development company. It engages in the acquisition, entitlement, and development of infrastructure for single-family residential communities. Forestar Group Inc. sells residential lots primarily to homebuilders.

The company was incorporated in 1955 and is headquartered in Arlington, Texas. Forestar Group Inc. operates as a subsidiary of D.R. Horton, Inc.

Expertise: financial modeling, mergers & acquisitions. Andy is also a founder at finbox.io, where he’s focused on building tools that make it faster and easier for investors to do investment research. Andy’s background is in investment banking where he led the analysis on over 50 board advisory engagements involving mergers and acquisitions, fairness opinions and solvency opinions. Some of his board advisory highlights: - Sears Holdings Corp.’s $620 mm spin-off via rights offering of Sears Outlet, Hometown Stores and Sears Hardware Stores. - Cerberus Capital Management’s $3.3 bn acquisition of SUPERVALU Inc.’s New Albertsons, Inc. assets. Andy can be reached at andy@finbox.io or at +1 (516) 778-6257.

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