Forestar Group (FOR) AI Stock Analysis

• Market Cap: $1.28B
• Dividend Yield: N/A
• Average Volume (3M): 128.14K
• Price to Earnings (P/E): 7.7
• Beta (1Y): 0.87
• Revenue Growth: 10.13%
• EPS Growth: -18.11%
• Country: US
• Employees: 440
• Sector: Real Estate
• Sector Strength: 53
• Industry: Real Estate - Development
• EPS (TTM): 1.70
• Shares Outstanding: 50,833,170
• 10 Day Avg. Volume: 106,718
• 30 Day Avg. Volume: 128,144
• PEG Ratio: 0.38
• Price to Book (P/B): 1.02
• Price to Sales (P/S): 1.08
• P/FCF Ratio: -10.16
• Enterprise Value/Market Cap: 1.34
• Enterprise Value/Revenue: 1.11
• Enterprise Value/Gross Profit: 4.96
• Enterprise Value/Ebitda: 8.36
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: N/A
• Number of Analyst Covering: 0
• EPS Forecast (FY): N/A
• Revenue Forecast (FY): N/A

• Rating: 70 Outperform
• Price Target: $29.00 ▲(12.06% Upside)

Forestar Group's strong revenue growth and strategic investments are significant strengths, supported by a robust liquidity position. However, cash flow challenges and market pressures in key regions temper the outlook. The stock's undervaluation adds to its appeal, but the absence of a dividend yield is a minor drawback.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective business strategies, enhancing long-term financial stability and market position.

Strategic Investments

Strategic investments in new markets and community expansion position Forestar for sustained growth and competitive advantage in the real estate sector.

Liquidity Position

A strong liquidity position provides financial flexibility to capitalize on growth opportunities and weather economic downturns, supporting long-term stability.

Negative Factors

Cash Flow Challenges

Negative cash flow can limit the company's ability to invest in growth and manage debt, potentially impacting future financial health and operational capacity.

Decreased Gross Profit Margin

A declining gross profit margin suggests rising costs or pricing pressures, which could erode profitability if not addressed, impacting long-term financial performance.

Market Pressure in Key Regions

Market pressure in key regions like Texas and Florida can hinder revenue growth and profitability, necessitating strategic adjustments to maintain competitive positioning.

Forestar Group Business Overview & Revenue Model

Company Description

Forestar 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 Money

Forestar 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 Financial Statement Overview

Summary

Forestar Group shows solid revenue growth and profitability with a stable balance sheet. However, cash flow challenges persist, with negative operating and free cash flows, which could impact future financial flexibility.

Income Statement

Forestar Group's income statement shows a stable revenue growth rate of 4.9% TTM, indicating a positive trajectory. The gross profit margin of 22.4% and net profit margin of 10.5% TTM reflect solid profitability, although slightly lower than the previous year. EBIT and EBITDA margins are healthy at 13.1% and 13.3% TTM, respectively, but have decreased compared to the previous year, suggesting some pressure on operating efficiency.

Balance Sheet

The balance sheet is strong with a debt-to-equity ratio of 0.53 TTM, indicating moderate leverage. The return on equity is 9.96% TTM, showing effective use of equity to generate profits, although it has decreased from the previous year. The equity ratio stands at 53.8%, reflecting a solid capital structure with a good proportion of equity financing.

Cash Flow

Cash flow analysis reveals challenges, with negative operating cash flow and free cash flow TTM. The free cash flow growth rate is negative, indicating declining cash generation. The operating cash flow to net income ratio is negative, suggesting cash flow issues, although the free cash flow to net income ratio is slightly above 1, indicating that free cash flow covers net income.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	1.54B	1.51B	1.44B	1.52B	1.33B	931.80M
Gross Profit	345.80M	359.30M	304.10M	324.00M	229.20M	118.10M
EBITDA	205.30M	243.80M	233.40M	236.90M	163.50M	77.30M
Net Income	162.60M	203.40M	166.90M	178.80M	110.20M	60.80M
Balance Sheet
Total Assets	3.12B	2.84B	2.47B	2.34B	2.10B	1.74B
Cash, Cash Equivalents and Short-Term Investments	189.20M	481.20M	616.00M	264.80M	153.60M	394.30M
Total Debt	883.40M	716.60M	703.10M	714.10M	711.80M	641.10M
Total Liabilities	1.44B	1.25B	1.10B	1.14B	1.09B	868.10M
Stockholders Equity	1.68B	1.59B	1.37B	1.20B	1.01B	870.90M
Cash Flow
Free Cash Flow	-336.40M	-160.60M	362.80M	105.20M	-304.70M	-169.00M
Operating Cash Flow	-334.80M	-158.40M	364.10M	108.70M	-303.10M	-168.40M
Investing Cash Flow	3.00M	7.30M	300.00K	1.30M	1.00M	5.00M
Financing Cash Flow	161.80M	16.30M	-13.20M	1.20M	61.40M	174.90M

Forestar Group Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 25.88
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Positive
• MACD: Positive
• RSI: Neutral
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For FOR, the sentiment is Negative. The current price of 25.88 is above the 20-day moving average (MA) of 25.85, below the 50-day MA of 26.46, and above the 200-day MA of 23.14, indicating a neutral trend. The MACD of -0.37 indicates Positive momentum. The RSI at 36.19 is Neutral, neither overbought nor oversold. The STOCH value of 6.57 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for FOR.

Forestar Group Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
FPH	77 Outperform	$637.95M	4.52	12.52%	―	-1.52%	81.35%
FOR	70 Outperform	$1.28B	7.67	9.99%	―	10.13%	-18.11%
VTMX	68 Neutral	$2.72B	399.35	0.22%	2.32%	13.04%	-98.33%
AXR	66 Neutral	$111.16M	8.43	10.39%	―	-19.47%	41.27%
Sector *	65 Neutral	$2.17B	12.19	3.79%	4.94%	3.15%	1.96%
ARL	53 Neutral	$252.94M	-21.38	―	―	-0.58%	―

Forestar Group Corporate Events

Forestar Group Reports Strong Q4, Eyes Growth in 2026

Forestar Group Inc., a leading national residential lot developer and a majority-owned subsidiary of D.R. Horton, operates in 64 markets across 23 states, focusing on delivering residential lots to homebuilders.

Forestar’s Earnings Call Highlights Growth Amid Challenges

Forestar’s recent earnings call painted a picture of robust financial health, marked by strong revenue growth and improved financial metrics. The company has made strategic investments and maintains a solid liquidity position, which are positive indicators for its future. However, challenges such as decreased gross profit margins, affordability constraints, and market pressures in key areas like Texas and Florida were also highlighted, suggesting areas that require attention.