Is Now The Time To Look At Buying Beazer Homes USA, Inc. (NYSE:BZH)?

Beazer Homes USA, Inc. (NYSE:BZH), is not the largest company out there, but it received a lot of attention from a substantial price increase on the NYSE over the last few months. Less-covered, small caps sees more of an opportunity for mispricing due to the lack of information available to the public, which can be a good thing. So, could the stock still be trading at a low price relative to its actual value? Today I will analyse the most recent data on Beazer Homes USA’s outlook and valuation to see if the opportunity still exists.

See our latest analysis for Beazer Homes USA

What is Beazer Homes USA worth?

The stock is currently trading at US$22.20 on the share market, which means it is overvalued by 35% compared to my intrinsic value of $16.50. This means that the opportunity to buy Beazer Homes USA at a good price has disappeared! But, is there another opportunity to buy low in the future? Since Beazer Homes USA’s share price is quite volatile, this could mean it can sink lower (or rise even further) in the future, giving us another chance to invest. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market.

What does the future of Beazer Homes USA look like?

Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it’s the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. Beazer Homes USA's earnings over the next few years are expected to increase by 33%, indicating a highly optimistic future ahead. This should lead to more robust cash flows, feeding into a higher share value.

What this means for you:

Are you a shareholder? BZH’s optimistic future growth appears to have been factored into the current share price, with shares trading above its fair value. However, this brings up another question – is now the right time to sell? If you believe BZH should trade below its current price, selling high and buying it back up again when its price falls towards its real value can be profitable. But before you make this decision, take a look at whether its fundamentals have changed.

Are you a potential investor? If you’ve been keeping an eye on BZH for a while, now may not be the best time to enter into the stock. The price has surpassed its true value, which means there’s no upside from mispricing. However, the optimistic prospect is encouraging for BZH, which means it’s worth diving deeper into other factors in order to take advantage of the next price drop.

If you'd like to know more about Beazer Homes USA as a business, it's important to be aware of any risks it's facing. You'd be interested to know, that we found 1 warning sign for Beazer Homes USA and you'll want to know about it.

If you are no longer interested in Beazer Homes USA, you can use our free platform to see our list of over 50 other stocks with a high growth potential.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.