Forestar Group (NYSE:FOR) - Share price, News & Analysis

Q: What is the Fair Price of FOR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

FOR ($13.43) is trading below our estimate of [[fair value]] ($263.84)

FOR fundamental analysis
Snowflake Score
Valuation	5/6
Future Growth	1/6
Past Performance	5/6
Financial Health	1/6
Dividends	0/6

FOR Stock Overview

Forestar Group Inc. operates as a residential lot development company in the United States.

Rewards

Trading at 94.9% below our estimate of its fair value

Revenue is forecast to grow 14.24% per year

Earnings grew by 90.1% over the past year

Risk Analysis

Earnings are forecast to decline by an average of 22.9% per year for the next 3 years

Debt is not well covered by operating cash flow

Forestar Group Competitors

AMREP

NYSE:AXR

US$84.5m

Green Giant

NasdaqCM:GGE

US$130.7m

Stratus Properties

NasdaqGS:STRS

US$277.6m

Howard Hughes

NYSE:HHC

US$3.6b

Price History & Performance

Summary of all time highs, changes and price drops for Forestar Group
Historical stock prices
Current Share Price	US$13.43
52 Week High	US$22.60
52 Week Low	US$12.92
Beta	1.77
1 Month Change	-8.89%
3 Month Change	-7.19%
1 Year Change	-35.59%
3 Year Change	-27.13%
5 Year Change	-21.92%
Change since IPO	-41.61%

Recent News & Updates

Jul 26

Forestar Group Inc. (NYSE:FOR) Analysts Are Reducing Their Forecasts For Next Year

Market forces rained on the parade of Forestar Group Inc. ( NYSE:FOR ) shareholders today, when the analysts downgraded...

Jul 18

Forestar Group Q3 2022 Earnings Preview

Forestar Group (NYSE:FOR) is scheduled to announce Q3 earnings results on Tuesday, July 19th, after market close. The consensus EPS Estimate is $0.81 (+153.1% Y/Y) and the consensus Revenue Estimate is $406.27M (+29.8% Y/Y). Over the last 3 months, EPS estimates have seen 1 upward revision and 1 downward. Revenue estimates have seen 1 upward revision and 1 downward.

Shareholder Returns

	FOR	US Real Estate	US Market
7D	0.4%	2.3%	1.2%
1Y	-35.6%	-37.8%	-11.6%

Return vs Industry: FOR exceeded the US Real Estate industry which returned -40.1% over the past year.

Return vs Market: FOR underperformed the US Market which returned -13.5% over the past year.

Price Volatility

Is FOR's price volatile compared to industry and market?
FOR volatility
FOR Average Weekly Movement	6.6%
Real Estate Industry Average Movement	7.8%
Market Average Movement	7.9%
10% most volatile stocks in US Market	17.0%
10% least volatile stocks in US Market	3.2%

Stable Share Price: FOR is not significantly more volatile than the rest of US stocks over the past 3 months, typically moving +/- 7% a week.

Volatility Over Time: FOR's weekly volatility (7%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
n/a	312	Dan Bartok	https://www.forestar.com

Forestar Group Inc. operates as a residential lot development company in the United States. The acquires land and develops infrastructure for single-family residential communities. It sells its residential single-family finished lots to homebuilders.

Forestar Group Fundamentals Summary

How do Forestar Group's earnings and revenue compare to its market cap?
FOR fundamental statistics
Market Cap	US$668.27m
Earnings (TTM)	US$172.00m
Revenue (TTM)	US$1.56b

3.9x

P/E Ratio

0.4x

P/S Ratio

Is FOR overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
FOR income statement (TTM)
Revenue	US$1.56b
Cost of Revenue	US$1.25b
Gross Profit	US$310.70m
Other Expenses	US$138.70m
Earnings	US$172.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)	3.46
Gross Margin	19.96%
Net Profit Margin	11.05%
Debt/Equity Ratio	61.5%

How did FOR perform over the long term?

See historical performance and comparison

We’ve recently updated our valuation analysis.

Valuation

Is FOR undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

Valuation Score 5/6

Price-To-Earnings vs Peers
Price-To-Earnings vs Industry
Price-To-Earnings vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Analyst Forecast

Key Valuation Metric

Which metric is best to use when looking at relative valuation for FOR?

Other financial metrics that can be useful for relative valuation.

The above table shows the n/a ratio for FOR. This is calculated by dividing FOR's market cap by their current preferred multiple.
What is FOR's n/a Ratio?
n/a Ratio	0x
n/a	n/a
Market Cap	US$668.27m

FOR key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue	0.8x
Enterprise Value/EBITDA	5.5x
PEG Ratio	-0.2x

Price to Earnings Ratio vs Peers

How does FOR's PE Ratio compare to its peers?

FOR PE Ratio vs Peers

The above table shows the PE ratio for FOR vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
Company	PE	Estimated Growth	Market Cap
Peer Average	15.6x
AXR AMREP	5.3x	n/a	US$84.5m
GGE Green Giant	26.4x	n/a	US$130.7m
STRS Stratus Properties	5.1x	n/a	US$277.6m
HHC Howard Hughes	25.4x	38.4%	US$3.6b
FOR Forestar Group	3.9x	-22.9%	US$668.3m

Price-To-Earnings vs Peers: FOR is good value based on its Price-To-Earnings Ratio (3.9x) compared to the peer average (15.6x).

Price to Earnings Ratio vs Industry

How does FOR's PE Ratio compare vs other companies in the US Real Estate Industry?

Price-To-Earnings vs Industry: FOR is good value based on its Price-To-Earnings Ratio (3.9x) compared to the US Real Estate industry average (10x)

Price to Earnings Ratio vs Fair Ratio

What is FOR's PE Ratio compared to its Fair PE Ratio? This is the expected PE Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.

FOR PE Ratio vs Fair Ratio.
Fair Ratio
Current PE Ratio	3.9x
Fair PE Ratio	17.8x

Price-To-Earnings vs Fair Ratio: FOR is good value based on its Price-To-Earnings Ratio (3.9x) compared to the estimated Fair Price-To-Earnings Ratio (17.8x).

Share Price vs Fair Value

What is the Fair Price of FOR when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.

Below Fair Value: FOR ($13.43) is trading below our estimate of fair value ($263.84)

Significantly Below Fair Value: FOR is trading below fair value by more than 20%.

Analyst Price Targets

What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?

Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.

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Future Growth

How is Forestar Group forecast to perform in the next 1 to 3 years based on estimates from 5 analysts?

Future Growth Score

1/6

Future Growth Score 1/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-22.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: FOR's earnings are forecast to decline over the next 3 years (-22.9% per year).

Earnings vs Market: FOR's earnings are forecast to decline over the next 3 years (-22.9% per year).

High Growth Earnings: FOR's earnings are forecast to decline over the next 3 years.

Revenue vs Market: FOR's revenue (14.2% per year) is forecast to grow faster than the US market (7.9% per year).

High Growth Revenue: FOR's revenue (14.2% per year) is forecast to grow slower than 20% per year.

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: FOR's Return on Equity is forecast to be low in 3 years time (14.9%).

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Past Performance

How has Forestar Group performed over the past 5 years?

Past Performance Score

5/6

Past Performance Score 5/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

31.9%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: FOR has high quality earnings.

Growing Profit Margin: FOR's current net profit margins (11.1%) are higher than last year (7.2%).

Past Earnings Growth Analysis

Earnings Trend: FOR's earnings have grown significantly by 31.9% per year over the past 5 years.

Accelerating Growth: FOR's earnings growth over the past year (90.1%) exceeds its 5-year average (31.9% per year).

Earnings vs Industry: FOR earnings growth over the past year (90.1%) exceeded the Real Estate industry 19.7%.

Return on Equity

High ROE: FOR's Return on Equity (15%) is considered low.

Discover strong past performing companies

Financial Health

How is Forestar Group's financial position?

Financial Health Score

1/6

Financial Health Score 1/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: FOR's short term assets ($197.9M) do not cover its short term liabilities ($211.8M).

Long Term Liabilities: FOR's short term assets ($197.9M) do not cover its long term liabilities ($908.1M).

Debt to Equity History and Analysis

Debt Level: FOR's net debt to equity ratio (48.7%) is considered high.

Reducing Debt: FOR's debt to equity ratio has increased from 19.3% to 61.5% over the past 5 years.

Debt Coverage: FOR's debt is not well covered by operating cash flow (3.9%).

Interest Coverage: FOR earns more interest than it pays, so coverage of interest payments is not a concern.

Balance Sheet

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Dividend

What is Forestar Group current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Cash Flow Coverage

Dividend Yield vs Market

Notable Dividend: Unable to evaluate FOR's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.

High Dividend: Unable to evaluate FOR's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.

Stability and Growth of Payments

Stable Dividend: Insufficient data to determine if FOR's dividends per share have been stable in the past.

Growing Dividend: Insufficient data to determine if FOR's dividend payments have been increasing.

Earnings Payout to Shareholders

Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: Unable to calculate sustainability of dividends as FOR has not reported any payouts.

Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

3.5yrs

Average management tenure

CEO

Dan Bartok (66 yo)

4.67yrs

Tenure

US$2,263,124

Compensation

Mr. Daniel C. Bartok, also known as Dan, has been Chief Executive Officer of Forestar Group Inc since December 29, 2017. Mr. Bartok joins Forestar Group Inc with more than 35 years of experience in real es...

CEO Compensation Analysis

Compensation vs Market: Dan's total compensation ($USD2.26M) is below average for companies of similar size in the US market ($USD3.93M).

Compensation vs Earnings: Dan's compensation has increased by more than 20% in the past year.

Leadership Team

Experienced Management: FOR's management team is considered experienced (3.5 years average tenure).

Board Members

Experienced Board: FOR's board of directors are considered experienced (4.8 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: FOR insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/08/10 00:00
End of Day Share Price	2022/08/10 00:00
Earnings	2022/06/30
Annual Earnings	2021/09/30