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Forestar Group Inc (FOR)
NYSE:FOR
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Forestar Group
(NYSE:FOR)
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Rating:71Outperform
Price Target:
$28.00
▲(9.33% Upside)
Forestar Group's overall stock score is driven by strong financial performance and attractive valuation. The company's robust revenue growth and strategic investments are significant positives. However, challenges in cash flow management and market pressures in key regions slightly temper the outlook.
Positive Factors
Revenue Growth
The company's consistent revenue growth indicates strong market demand and effective business strategies, enhancing its competitive position.
Strategic Investments
Strategic investments in land acquisition and market expansion enhance Forestar's growth potential and market reach.
Liquidity Position
A strong liquidity position provides financial flexibility to invest in growth opportunities and weather economic uncertainties.
Negative Factors
Cash Flow Challenges
Negative cash flows could limit Forestar's ability to fund operations and growth initiatives, posing a risk to long-term financial health.
Decreased Gross Profit Margin
A declining gross profit margin may indicate rising costs or pricing pressures, potentially impacting profitability.
Market Pressure in Key Regions
Market pressures in key regions like Texas and Florida could hinder growth and profitability in these important markets.
Forestar Group (FOR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.30B
Dividend YieldN/A
Average Volume (3M)136.08K
Price to Earnings (P/E)7.8
Beta (1Y)0.77
Revenue Growth10.13%
EPS Growth-18.11%
CountryUS
Employees440
SectorReal Estate
Sector Strength53
IndustryReal Estate - Development
Share Statistics
EPS (TTM)1.70
Shares Outstanding50,885,326
10 Day Avg. Volume128,852
30 Day Avg. Volume136,082
Financial Highlights & Ratios
PEG Ratio-0.44
Price to Book (P/B)0.85
Price to Sales (P/S)0.81
P/FCF Ratio-6.85
Enterprise Value/Market Cap1.37
Enterprise Value/Revenue1.08
Enterprise Value/Gross Profit4.93
Enterprise Value/Ebitda8.22
Forecast
1Y Price Target
$32.00Price Target Upside24.95% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
EPS Forecast (FY)N/A
Revenue Forecast (FY)N/A
Forestar Group Business Overview & Revenue Model
Company DescriptionForestar Group Inc. operates as a residential lot development company in the United States. The acquires land and develops infrastructure for single-family residential communities. It sells its residential single-family finished lots to homebuilders. The company is headquartered in Arlington, Texas. Forestar Group Inc. is a subsidiary of D.R. Horton, Inc.
How the Company Makes MoneyForestar Group generates revenue primarily through the sale of developed residential and commercial lots to homebuilders and other developers. The company acquires land and enhances its value through zoning, infrastructure development, and community planning, allowing it to sell these lots at a premium. Additionally, Forestar earns revenue through its homebuilding operations, where it constructs and sells homes directly to consumers. Key revenue streams also include joint ventures and partnerships with other developers and builders, which help to mitigate risk and expand its market reach. The demand for housing and favorable market conditions contribute significantly to Forestar's earnings, supported by its strategic positioning in high-growth regions.
Forestar Group Earnings Call Summary
Earnings Call Date:Oct 28, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Jan 20, 2026
Earnings Call Sentiment Positive
Forestar demonstrated strong revenue growth and improved financial metrics, supported by strategic investments and a robust liquidity position. However, challenges such as decreased gross profit margins, affordability constraints, and pressure in key markets indicate areas of concern.Q4-2025 Updates
Positive Updates
Strong Revenue Growth
Forestar generated over $670 million in revenue in Q4 and $1.7 billion for the full year, surpassing their guidance. Annual revenues grew by 10%.
Increase in Book Value per Share
Book value per share increased by 11% from the previous year, reaching $34.78.
Net Income and Profit Margin Improvements
Net income increased 7% to $87 million in Q4. For the year, net income totaled $167.9 million. The pretax profit margin for the quarter was 16.9%.
Strategic Investments and Market Expansion
Forestar invested more than $7.3 billion over the last 5 years in land acquisition and development, entering 7 new markets and increasing community count by over 10%.
Strong Liquidity and Financial Position
Forestar ended the quarter with $968 million of liquidity, including $379 million in unrestricted cash, and maintained a net debt-to-capital ratio of 19.3%.
Negative Updates
Decreased Gross Profit Margin
Gross profit margin for the quarter was 22.3%, down 160 basis points from the previous year.
Challenges in Home Demand
New home sales were slower due to continued affordability constraints and cautious consumer sentiment.
Pressure in Texas and Florida Markets
Some pressure observed in Texas and parts of Florida, affecting market performance.
Company Guidance
During the fourth quarter and fiscal year 2025 earnings conference call, Forestar provided several key metrics and guidance for fiscal 2026. The company reported a strong finish to the year with over $670 million in fourth-quarter revenue and $1.7 billion for the full year, marking a 10% growth in annual revenues. For fiscal 2025, net income increased to $167.9 million, with a diluted EPS of $3.29. The average lot sales price for the year was $108,400, and the gross profit margin for the quarter was 22.3%. Forestar ended the year with $968 million in liquidity and a book value per share of $34.78, up 11% year over year. Looking ahead, Forestar expects to deliver between 14,000 and 15,000 lots in fiscal 2026, generating $1.6 billion to $1.7 billion in revenue, with a higher revenue forecast for the second half of the year. The company plans to invest approximately $1.4 billion in land acquisition and development, targeting a pretax return of at least 15% on new projects.Forestar Group Financial Statement Overview
Summary
Forestar Group shows strong revenue growth and profitability, but faces challenges with cash flow management. The balance sheet is stable with moderate leverage, but the decline in cash flows could pose risks if not addressed.Income Statement
Forestar Group has demonstrated consistent revenue growth, with a 7.7% increase in the latest period. The gross profit margin is stable at around 21.9%, and the net profit margin is healthy at 10.1%. However, there has been a slight decline in EBIT and EBITDA margins compared to the previous year, indicating potential cost pressures.Balance Sheet
The company maintains a moderate debt-to-equity ratio of 0.50, reflecting a balanced approach to leverage. Return on equity is reasonable at 10.5%, though slightly lower than previous years. The equity ratio stands at 56.2%, indicating a solid equity base relative to total assets.Cash Flow
Forestar Group faces challenges with negative operating and free cash flows, which have declined by 41.2% in the latest period. The operating cash flow to net income ratio is negative, suggesting cash flow issues despite profitability. The free cash flow to net income ratio remains at 1.0, indicating all net income is being consumed by free cash flow needs.| Breakdown | TTM | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 1.66B | 1.66B | 1.51B | 1.44B | 1.52B | 1.33B |
| Gross Profit | 363.50M | 363.50M | 359.30M | 304.10M | 324.00M | 229.20M |
| EBITDA | 217.80M | 222.80M | 243.80M | 233.40M | 236.90M | 163.50M |
| Net Income | 168.00M | 167.90M | 203.40M | 166.90M | 178.80M | 110.20M |
Balance Sheet | ||||||
| Total Assets | 2.84B | 2.84B | 2.84B | 2.47B | 2.34B | 2.10B |
| Cash, Cash Equivalents and Short-Term Investments | 481.20M | 481.20M | 481.20M | 616.00M | 264.80M | 153.60M |
| Total Debt | 817.10M | 817.10M | 716.60M | 703.10M | 714.10M | 711.80M |
| Total Liabilities | 1.25B | 1.25B | 1.25B | 1.10B | 1.14B | 1.09B |
| Stockholders Equity | 1.60B | 1.60B | 1.59B | 1.37B | 1.20B | 1.01B |
Cash Flow | ||||||
| Free Cash Flow | -199.20M | -197.70M | -160.60M | 362.80M | 105.20M | -304.70M |
| Operating Cash Flow | -197.70M | -197.70M | -158.40M | 364.10M | 108.70M | -303.10M |
| Investing Cash Flow | 3.20M | 3.20M | 7.30M | 300.00K | 1.30M | 1.00M |
| Financing Cash Flow | 92.50M | 92.50M | 16.30M | -13.20M | 1.20M | 61.40M |
Forestar Group Technical Analysis
Positive
25.61
Price Trends
25.24
Positive
26.02
Negative
23.65
Positive
Market Momentum
-0.15
Negative
53.49
Neutral
75.97
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FOR, the sentiment is Positive. The current price of 25.61 is above the 20-day moving average (MA) of 25.39, above the 50-day MA of 25.24, and above the 200-day MA of 23.65, indicating a bullish trend. The MACD of -0.15 indicates Negative momentum. The RSI at 53.49 is Neutral, neither overbought nor oversold. The STOCH value of 75.97 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for FOR.
Forestar Group Risk Analysis
Forestar Group disclosed 29 risk factors in its most recent earnings report. Forestar Group reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 2 New Risks
1.
We are subject to litigation or other claims, which could materially and adversely affect us. Q3, 2025
2.
Changes in income tax and securities laws could adversely affect our business and financial results Q3, 2025
Forestar Group Peers Comparison
UnderperformOutperform
Sector (65)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
73 Outperform | $632.50M | 4.48 | 12.52% | ― | -1.52% | 81.35% | |
71 Outperform | $1.30B | 7.79 | 9.99% | ― | 10.13% | -18.11% | |
68 Neutral | $2.78B | 413.07 | 0.22% | 2.29% | 13.04% | -98.33% | |
67 Neutral | $104.46M | 10.07 | 8.04% | ― | -27.32% | -15.12% | |
65 Neutral | $2.17B | 12.19 | 3.79% | 4.94% | 3.15% | 1.96% | |
53 Neutral | $255.85M | 44.42 | 0.95% | ― | -0.58% | ― |
* Real Estate Sector Average
FOR
Forestar Group
25.61
-0.08
-0.31%
ARL
American Realty Investors
15.84
2.34
17.33%
AXR
Amrep
19.69
-9.36
-32.22%
FPH
Five Point Holdings
5.81
2.13
57.88%
OZ
Belpointe PREP
54.62
-7.93
-12.68%
VTMX
Corporacion Inmobiliaria Vesta S.A.B. de C.V. ADR
31.62
8.64
37.60%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.