Forecast: Analysts Think Forestar Group Inc.'s (NYSE:FOR) Business Prospects Have Improved Drastically

Shareholders in Forestar Group Inc. (NYSE:FOR) may be thrilled to learn that the analysts have just delivered a major upgrade to their near-term forecasts. The analysts greatly increased their revenue estimates, suggesting a stark improvement in business fundamentals. Forestar Group has also found favour with investors, with the stock up a remarkable 22% to US$29.07 over the past week. Could this upgrade be enough to drive the stock even higher?

Following the upgrade, the most recent consensus for Forestar Group from its four analysts is for revenues of US$1.5b in 2024 which, if met, would be a solid 16% increase on its sales over the past 12 months. Statutory earnings per share are presumed to expand 18% to US$3.43. Prior to this update, the analysts had been forecasting revenues of US$1.2b and earnings per share (EPS) of US$2.41 in 2024. So we can see there's been a pretty clear increase in analyst sentiment in recent times, with both revenues and earnings per share receiving a decent lift in the latest estimates.

Check out our latest analysis for Forestar Group

With these upgrades, we're not surprised to see that the analysts have lifted their price target 34% to US$31.00 per share. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. The most optimistic Forestar Group analyst has a price target of US$32.00 per share, while the most pessimistic values it at US$30.00. Even so, with a relatively close grouping of estimates, it looks like the analysts are quite confident in their valuations, suggesting Forestar Group is an easy business to forecast or the underlying assumptions are obvious.

Of course, another way to look at these forecasts is to place them into context against the industry itself. It's pretty clear that there is an expectation that Forestar Group's revenue growth will slow down substantially, with revenues to the end of 2024 expected to display 13% growth on an annualised basis. This is compared to a historical growth rate of 35% over the past five years. Juxtapose this against the other companies in the industry with analyst coverage, which are forecast to grow their revenues (in aggregate) 9.4% per year. So it's pretty clear that, while Forestar Group's revenue growth is expected to slow, it's still expected to grow faster than the industry itself.

The Bottom Line

The most important thing to take away from this upgrade is that analysts upgraded their earnings per share estimates for next year, expecting improving business conditions. Fortunately, analysts also upgraded their revenue estimates, and our data indicates sales are expected to perform better than the wider market. Given that the consensus looks almost universally bullish, with a substantial increase to forecasts and a higher price target, Forestar Group could be worth investigating further.

Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Forestar Group analysts - going out to 2025, and you can see them free on our platform here.

Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are upgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.

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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.