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FOR: Rising Lot Deliveries Will Drive Profit Margins Amid Moderated Revenue Outlook

Rising Mortgage Rates And DR Horton Ties Will Cripple Demand

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FOR
AnalystLowTarget
Not Invested
Published 27 Jul 2025

Update shared on 17 Dec 2025

Fair value Increased 8.70%
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AnalystLowTarget's Fair Value
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1Y
-2.9%
7D
-5.2%

Analysts have raised their price target on Forestar Group from 23 dollars to 25 dollars, reflecting expectations for stronger profit margins that more than offset slightly slower projected revenue growth and a modestly higher discount rate.

What's in the News

  • Forestar Group issued new fiscal 2026 guidance, projecting delivery of 14,000 to 15,000 lots, signaling continued expansion of its residential lot development pipeline (Key Developments)
  • The company expects fiscal 2026 revenue between 1.6 billion and 1.7 billion dollars, underscoring management confidence in sustained demand from homebuilders (Key Developments)
  • Guidance for higher lot volumes and revenue provides greater visibility into Forestar Group's medium term growth trajectory, which can influence valuation assumptions and investor sentiment (Key Developments)

Valuation Changes

  • The Fair Value Target has risen slightly from 23.00 dollars to 25.00 dollars, reflecting modest upside in the intrinsic valuation.
  • The Discount Rate has increased slightly from 10.14 percent to 10.44 percent, indicating a marginally higher perceived risk profile or cost of capital.
  • The Revenue Growth assumption has fallen significantly from about 8.39 percent to about 4.05 percent, signaling more conservative expectations for top line expansion.
  • The Net Profit Margin forecast has risen moderately from about 7.56 percent to about 8.93 percent, implying improved profitability despite slower revenue growth.
  • The future P/E multiple has edged down slightly from about 10.55 times to about 10.27 times, suggesting a marginally more cautious stance on valuation multiples.

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Disclaimer

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