Results: Forestar Group Inc. Exceeded Expectations And The Consensus Has Updated Its Estimates

Forestar Group Inc. (NYSE:FOR) investors will be delighted, with the company turning in some strong numbers with its latest results. It was overall a positive result, with revenues beating expectations by 2.4% to hit US$334m. Forestar Group also reported a statutory profit of US$0.89, which was an impressive 23% above what the analysts had forecast. This is an important time for investors, as they can track a company's performance in its report, look at what experts are forecasting for next year, and see if there has been any change to expectations for the business. With this in mind, we've gathered the latest statutory forecasts to see what the analysts are expecting for next year.

See our latest analysis for Forestar Group

Taking into account the latest results, the four analysts covering Forestar Group provided consensus estimates of US$1.51b revenue in 2024, which would reflect a noticeable 3.3% decline over the past 12 months. Statutory earnings per share are expected to shrink 4.4% to US$3.83 in the same period. In the lead-up to this report, the analysts had been modelling revenues of US$1.53b and earnings per share (EPS) of US$3.71 in 2024. So the consensus seems to have become somewhat more optimistic on Forestar Group's earnings potential following these results.

There's been no major changes to the consensus price target of US$40.38, suggesting that the improved earnings per share outlook is not enough to have a long-term positive impact on the stock's valuation. 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$44.00 per share, while the most pessimistic values it at US$37.50. 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 the analysts are all using similar assumptions.

Looking at the bigger picture now, one of the ways we can make sense of these forecasts is to see how they measure up against both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 6.5% by the end of 2024. This indicates a significant reduction from annual growth of 23% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 11% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Forestar Group is expected to lag the wider industry.

The Bottom Line

The most important thing here is that the analysts upgraded their earnings per share estimates, suggesting that there has been a clear increase in optimism towards Forestar Group following these results. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$40.38, with the latest estimates not enough to have an impact on their price targets.

Following on from that line of thought, we think that the long-term prospects of the business are much more relevant than next year's earnings. We have estimates - from multiple Forestar Group analysts - going out to 2026, and you can see them free on our platform here.

You can also view our analysis of Forestar Group's balance sheet, and whether we think Forestar Group is carrying too much debt, for free on our platform here.

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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.