Forestar Group (FOR) AI Stock Analysis

Compare

218 Followers

Top Page

Forestar Group

(NYSE:FOR)

Rating:78Outperform

Price Target:

$31.00

▲(7.94% Upside)

Forestar Group's strong valuation and technical momentum are the primary drivers of its stock score. Despite challenges in cash flow and mixed earnings call results, the company's robust financial stability and growth potential in contracted backlog support a positive outlook.

Positive Factors

Analyst Recommendation

Analyst recommends a Buy rating for Forestar with a price target of $40.

Market Expansion

Forestar expanded into VA and reentered WA, OR, and UT, growing share against smaller, often under-capitalized peers.

Operational Efficiency

Operational efficiencies in a market constrained by regulatory delays are viewed positively.

Negative Factors

Valuation Concerns

Forestar is valued at 1.27 times its book value per share.

Forestar Group (FOR) vs. SPDR S&P 500 ETF (SPY)

Market Cap

$1.43B

Dividend YieldN/A

Average Volume (3M)175.61K

Price to Earnings (P/E)9.0

Beta (1Y)0.86

Revenue Growth2.35%

EPS Growth-17.21%

CountryUS

Employees440

SectorReal Estate

Sector Strength53

IndustryReal Estate - Development

Share Statistics

EPS (TTM)0.65

Shares Outstanding50,833,170

10 Day Avg. Volume155,101

30 Day Avg. Volume175,607

Financial Highlights & Ratios

PEG RatioN/A

Price to Book (P/B)N/A

Price to Sales (P/S)N/A

P/FCF RatioN/A

Enterprise Value/Market Cap1.20

Enterprise Value/Revenue1.17

Enterprise Value/Gross Profit5.07

Enterprise Value/Ebitda8.36

Forecast

1Y Price Target

$31.33

Price Target Upside9.09% Upside

Rating ConsensusStrong Buy

Number of Analyst Covering4

Forestar Group Business Overview & Revenue Model

Company DescriptionForestar Group Inc. is a leading residential and commercial real estate development and land services company based in the United States. The company operates primarily in two sectors: real estate development and land acquisition. Forestar focuses on acquiring, developing, and selling residential and commercial properties, as well as providing land services such as land entitlement and planning. Its core products include residential lots for homebuilders and commercial properties for various businesses.

How the Company Makes MoneyForestar Group generates revenue through multiple streams primarily centered around its real estate activities. The company earns money by purchasing land, entitling it for development, and then selling residential lots to homebuilders, which constitutes a significant portion of its revenue. Additionally, Forestar engages in commercial property development, leasing, and sales, further diversifying its income sources. The company also benefits from partnerships with homebuilders and other real estate developers, which can lead to joint ventures and collaborative projects, enhancing its revenue potential. Furthermore, Forestar's efficient land acquisition strategies and market positioning in high-demand areas contribute to its profitability.

Forestar Group Earnings Call Summary

Earnings Call Date:Jul 22, 2025

(Q3-2025)

% Change Since: |

Next Earnings Date:Oct 28, 2025

Earnings Call Sentiment Neutral

The earnings call presented a mixed picture with strong revenue growth and an increase in lot sales and contracted backlog as highlights. However, there were declines in net income and gross profit margins, alongside increased SG&A expenses and a lowered lot delivery guidance. The positive and negative aspects are fairly balanced.

Q3-2025 Updates

Positive Updates

Revenue Growth

Revenues for the third quarter increased 23% to $390.5 million compared to $318.4 million in the prior year quarter.

Increased Lot Sales

Lots sold increased 11% year-over-year and 6% sequentially to 3,605 lots.

High Contracted Backlog

Lots under contract to sale increased 26% from a year ago to 25,700 lots, representing $2.3 billion of future revenue, the highest contracted backlog in the last 5 years.

Strong Liquidity Position

Ended the quarter with $792 million of liquidity, including $189 million in cash and $603 million in available credit.

Expansion into New Markets

Entered 7 new markets and increased community count by 16% in the last year.

Negative Updates

Net Income Decline

Net income for the third quarter was $32.9 million, down from $38.7 million in the prior year quarter.

Gross Profit Margin Decrease

Gross profit margin for the quarter was 20.4%, down from 22.5% in the prior year quarter.

Increased SG&A Expenses

SG&A expense was $37.4 million or 9.6% of revenues, compared to 9.2% in the prior year quarter.

Lowered Lot Delivery Guidance

Lowered lot delivery guidance to 14,500 to 15,000 lots in response to current market conditions.

Company Guidance

During Forestar's third quarter 2025 earnings call, the company maintained its fiscal 2025 revenue guidance at $1.5 billion to $1.55 billion but adjusted its lot delivery guidance to 14,500 to 15,000 lots due to current market conditions. The quarter saw a 23% increase in revenues to $390.5 million, alongside a net income of $32.9 million, or $0.65 per diluted share. Despite a year-over-year decrease in gross profit margin from 22.5% to 20.4%, largely due to a low-margin community closeout, lots sold increased by 11% to 3,605, with average sales prices influenced by the mix of higher price point lots. Forestar's liquidity stood strong at $792 million, with significant investments in land development and a notable contracted backlog of 25,700 lots promising $2.3 billion in future revenue. The company remains focused on maintaining a solid capital structure and leveraging its relationship with D.R. Horton, aiming to expand its share within their lot purchases while also growing its customer base.

Forestar Group Financial Statement Overview

Summary

Forestar Group exhibits strong financial stability with impressive profit margins and a debt-free balance sheet. However, challenges in revenue growth and negative cash flow impact its financial flexibility.

Income Statement

Positive

Forestar Group demonstrates robust financial performance with a strong gross profit margin of 41.5% and a notable EBIT margin of 32.2% in the TTM. While revenue decreased by 2.5% compared to the previous period, the company maintains healthy profitability with a net profit margin of 11.4%. The decline in revenue is a concern, but the margins suggest efficient cost control and operational effectiveness.

Balance Sheet

Very Positive

The balance sheet shows a strong financial position with zero total debt, resulting in an exceptional debt-to-equity ratio of 0. The equity ratio stands at 54.1%, reflecting a solid capital structure. The return on equity is 10.2%, indicating efficient use of equity to generate profits. The company's low leverage reduces financial risk and enhances stability.

Cash Flow

Neutral

The cash flow statement highlights challenges with negative free cash flow growth and an operating cash flow to net income ratio of -2.45. Despite these challenges, the company shows resilience with a positive free cash flow to net income ratio of -2.46, indicating potential for future improvement. The significant negative operating cash flow requires careful management to ensure liquidity.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.47B	1.51B	1.44B	1.52B	1.33B	931.80M
Gross Profit	338.30M	359.30M	304.10M	324.00M	229.20M	118.10M
EBITDA	205.30M	243.80M	209.40M	233.10M	163.50M	77.30M
Net Income	168.40M	203.40M	166.90M	178.80M	110.20M	60.80M
Balance Sheet
Total Assets	3.04B	2.84B	2.47B	2.34B	2.10B	1.74B
Cash, Cash Equivalents and Short-Term Investments	174.30M	481.20M	616.00M	264.80M	153.60M	394.30M
Total Debt	881.30M	716.60M	695.00M	706.00M	704.50M	641.10M
Total Liabilities	1.40B	1.25B	1.10B	1.14B	1.09B	868.10M
Stockholders Equity	1.65B	1.59B	1.37B	1.20B	1.01B	870.90M
Cash Flow
Free Cash Flow	-413.70M	-160.60M	362.80M	105.20M	-304.70M	-169.00M
Operating Cash Flow	-412.30M	-158.40M	364.10M	108.70M	-303.10M	-168.40M
Investing Cash Flow	8.30M	7.30M	300.00K	1.30M	1.00M	5.00M
Financing Cash Flow	162.10M	16.30M	-13.20M	1.20M	61.40M	174.90M

Forestar Group Technical Analysis

Technical Analysis Sentiment

Positive

Last Price28.72

Price Trends

50DMA

24.68

Positive

100DMA

22.15

Positive

200DMA

23.37

Positive

Market Momentum

MACD

0.87

Positive

RSI

66.76

Neutral

STOCH

43.51

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 28.72 is above the 20-day moving average (MA) of 27.24, above the 50-day MA of 24.68, and above the 200-day MA of 23.37, indicating a bullish trend. The MACD of 0.87 indicates Positive momentum. The RSI at 66.76 is Neutral, neither overbought nor oversold. The STOCH value of 43.51 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 27 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 0 New Risks

Forestar Group Peers Comparison

Overall Rating

UnderperformOutperform

Sector (65)

Financial Indicators

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FOR	78 Outperform	$1.43B	9.01	10.19%	―	2.35%	-17.21%
FPH	76 Outperform	$606.66M	5.26	10.56%	―	-19.68%	44.82%
Sector *	65 Neutral	$2.09B	15.75	3.79%	4.97%	4.78%	6.63%
LSEA	61 Neutral		―		―	24.15%	-60.70%
ARL	43 Neutral	$256.17M	―	-1.93%	―	-4.84%	-412.72%
OZ	―	$249.72M	―	-10.39%	―	―	―
MRNO	―	$451.31M	114.80		―	―	―

* Real Estate Sector Average

Performance Comparison

FOR

Forestar Group

28.72

-1.30

-4.33%

ARL

American Realty Investors

15.86

-0.72

-4.34%

FPH

Five Point Holdings

5.68

2.44

75.31%

LSEA

Landsea Homes

11.31

-0.44

-3.74%

Belpointe PREP

64.10

-2.23

-3.36%

MRNO

Murano Global Investments

5.45

-1.85

-25.34%

Forestar Group Corporate Events

Executive/Board ChangesBusiness Operations and Strategy

Forestar Group Expands Board with CEO Appointment

Positive

Apr 15, 2025

On April 14, 2025, Forestar Group announced the appointment of Anthony W. Oxley, its President and CEO, as a director on the Board, expanding it from six to seven members. This strategic move is expected to enhance the company’s leadership, leveraging Mr. Oxley’s extensive experience in business development and land management to strengthen Forestar’s market position.

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.Date of analysis: Aug 20, 2025