Forestar $FOR Awesome EPS and Revenue Beats

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FOR stock is moving higher in after-hours trading on January 27, 2022, after the company reported excellent EPS and revenue beats.

Forestar Reports Fiscal 2022 First Quarter Results

Forestar Group Inc. (NYSE: FOR), a leading national residential lot developer, today reported financial results for its first fiscal quarter ended December 31, 2021.

Forestar reported Q1 EPS of 81c versus the consensus estimate of 67c. The company reported Q1 revenue of $407.6M versus the consensus estimate of $358.1M.

Daniel C. Bartok, CEO, said, “We continued our strong momentum in the first quarter of fiscal 2022, achieving record first quarter lot sales, revenue and earnings per diluted share. Our profitability continues to improve, primarily due to delivering more lots from Forestar sourced projects as compared to prior year periods, combined with the continued strong market demand for finished lots. These results reflect the strength of the teams that we have built out across our national footprint. As we head into our second fiscal quarter, Forestar is extremely well-positioned to continue capturing market share in the highly fragmented lot development industry.”

Fiscal 2022 First Quarter Highlights

All comparisons are year-over-year, unless otherwise noted

  1. Net income attributable to Forestar increased 84% to $40.5 million or $0.81 per diluted share
  2. Pre-tax income increased 83% to $53.5 million, while pre-tax profit margin increased 360 basis points to 13.1%
  3. Revenues increased 33% to $407.6 million
  4. Residential lots sold in the quarter increased 27% to 4,516 lots
  5. Owned and controlled lots increased 33% to 103,300 lots
  6. Achieved return on equity (“ROE”) of 13.2% for the trailing twelve months ended December 31, 2021, an improvement of 550 basis points; 7th consecutive quarter of ROE improvement
  7. Increasing fiscal 2022 guidance:
  8. Lots sold to 19,500 to 20,000 lots compared to prior guidance of 19,000 to 19,500 lots
  9. Revenue to approximately $1.7 billion compared to prior guidance of $1.65 billion
  10. Pre-tax profit margin to a range of 13.5% to 14.0% compared to prior guidance of approximately 13.0%

Donald J. Tomnitz, Chairman of the Board, said, “The Forestar team is off to a great start in fiscal 2022 with over 4,500 lot deliveries during our first fiscal quarter. We continue to capture market share in the fragmented and under-capitalized U.S. lot development industry, and as a result, we are increasing our guidance for fiscal 2022. We now expect to deliver between 19,500 and 20,000 lots generating approximately $1.7 billion of revenue, and expect our pre-tax profit margin to be between 13.5% and 14.0% for the full fiscal year. Forestar’s return-focused business model is centered on our high inventory turnover, lower risk lot manufacturing strategy. Our strategic and operational plan is underpinned by our low net leverage and strong liquidity, the engagement of our people and our strategic relationship with D.R. Horton, the nation’s largest homebuilder. With over 100,000 lots owned and controlled at December 31, 2021, we expect continued robust growth with increasing pre-tax profitability and returns in the coming years.”

📺 Here’s how homebuilders will fare in 2022

Here's how homebuilders will fare in 2022

📉 FOR Stock Technical Analysis

FOR stock chart on January 27, 2022, in downtrend.

Both the long and short term trends are negative. It is better to avoid buying stocks with negative trends. FOR is part of the Real Estate Management & Development industry. There are 70 other stocks in this industry, FOR did better than 42% of them. FOR is currently making a new 52 week low. This is a very bad signal. FOR is lagging the S&P500 Index which is trading in the middle of its 52 week range.

There is a resistance zone ranging from 18.24 to 18.26. This zone is formed by a combination of multiple trend lines in multiple time frames. There is also a resistance zone ranging from 18.85 to 18.93. This zone is formed by a combination of multiple trend lines and important moving averages in the daily time frame. Finally, there is resistance at 21.31 from a trend line in the weekly time frame.

The technical rating of FOR is bad and it also does not present a quality setup at the moment. FOR stock has a Setup Rating of 3 out of 10. Price movement has been a little bit too volatile to find a nice entry and exit point. It is probably a good idea to wait for a consolidation first. Click here to sign up for email alerts on when FOR stock consolidates and has a Setup Rating of 8 or higher.

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