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Forestar (FOR)
:FOR
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Forestar Group
(NYSE:FOR)
Select Model
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Rating:78Outperform
Price Target:
$31.00
▲(17.65% 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
Strong Liquidity Position
A robust liquidity position ensures Forestar can meet its short-term obligations and invest in growth opportunities, supporting long-term stability.
High Contracted Backlog
A high contracted backlog indicates strong future revenue streams, providing visibility and stability in earnings over the coming periods.
Expansion into New Markets
Expanding into new markets diversifies revenue sources and reduces dependency on existing markets, enhancing long-term growth potential.
Negative Factors
Net Income Decline
A decline in net income can signal potential issues in profitability and may impact the company's ability to reinvest in its operations.
Gross Profit Margin Decrease
Decreasing gross profit margins suggest rising costs or pricing pressures, which could erode profitability if not managed effectively.
Increased SG&A Expenses
Rising SG&A expenses can reduce operational efficiency and profitability, potentially impacting the company's competitive position.
Forestar Group (FOR) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$1.34B
Dividend YieldN/A
Average Volume (3M)148.54K
Price to Earnings (P/E)8.3
Beta (1Y)0.84
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. Volume157,111
30 Day Avg. Volume148,543
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 Cap1.28
Enterprise Value/Revenue1.17
Enterprise Value/Gross Profit5.07
Enterprise Value/Ebitda8.36
Forecast
1Y Price Target
$31.33Price Target Upside18.90% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering4
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 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
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.78
Positive
Balance Sheet
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.85
Very Positive
Cash Flow
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.60
Neutral
| 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
Positive
26.35
Price Trends
26.48
Negative
23.38
Positive
23.18
Positive
Market Momentum
-0.21
Positive
46.86
Neutral
18.24
Positive
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 26.35 is below the 20-day moving average (MA) of 27.17, below the 50-day MA of 26.48, and above the 200-day MA of 23.18, indicating a neutral trend. The MACD of -0.21 indicates Positive momentum. The RSI at 46.86 is Neutral, neither overbought nor oversold. The STOCH value of 18.24 is Positive, 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
UnderperformOutperform
Sector (65)
FOR
Forestar Group
26.35
-6.02
-18.60%
ARL
American Realty Investors
16.47
-1.07
-6.10%
AXR
Amrep
24.72
-4.97
-16.74%
FPH
Five Point Holdings
6.23
2.08
50.12%
OZ
Belpointe PREP
64.25
-4.77
-6.91%
VTMX
Corporacion Inmobiliaria Vesta S.A.B. de C.V. ADR
27.85
1.62
6.18%
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.