Forestar Group (NYSE:FOR) Announces Quarterly Earnings Results

Forestar Group (NYSE:FOR) announced its quarterly earnings data on Tuesday. The oil and gas exploration company reported $0.63 earnings per share for the quarter, missing the consensus estimate of $0.72 by ($0.09), Zacks reports. Forestar Group had a net margin of 9.90% and a return on equity of 9.76%. The firm had revenue of $374.30 million for the quarter, compared to the consensus estimate of $372.56 million. During the same period last year, the company posted $0.62 earnings per share. Forestar Group’s revenue for the quarter was up 6.6% on a year-over-year basis.

Here are the key takeaways from Forestar Group’s conference call:

• Strong quarter and backlog: Revenues rose 7% to $374.3M and pre-tax income increased 8% to $43.9M, with book value per share up 10% year-over-year to $35.66 and a contracted backlog providing visibility to $2.2B of future revenue.
• Healthy liquidity and conservative leverage: Forestar ended the quarter with more than $1B of liquidity (including $362M cash and $672M undrawn capacity) and a net debt-to-capital ratio of 19.2%, with no senior note maturities in the next 12 months.
• Robust operational footprint and contracted sales: The company held a 94,400-lot position (63,500 owned), sold 2,938 lots at an average price of $112,800, and had 24,100 owned lots under contract secured by $209M of deposits.
• Margin pressure from option write-offs: Gross profit margin fell to 21.4% (from 22.6% a year ago), driven in part by $6.3M of land option charges and pre-acquisition write-offs versus $0.9M in the prior year quarter.
• Significant customer opportunity with D.R. Horton: D.R. Horton remains Forestar’s largest customer (14% of Horton starts on Forestar lots), and a mutual goal of reaching one-third penetration implies meaningful upside to grow share with that builder.

Forestar Group Price Performance

NYSE:FOR opened at $26.73 on Wednesday. Forestar Group has a 52-week low of $18.46 and a 52-week high of $30.74. The stock has a fifty day moving average of $26.64 and a 200 day moving average of $26.09. The company has a debt-to-equity ratio of 0.44, a quick ratio of 0.71 and a current ratio of 0.71. The firm has a market capitalization of $1.36 billion, a price-to-earnings ratio of 8.17 and a beta of 1.45.

Institutional Trading of Forestar Group

Several institutional investors and hedge funds have recently modified their holdings of FOR. Dimensional Fund Advisors LP boosted its position in shares of Forestar Group by 0.6% during the 4th quarter. Dimensional Fund Advisors LP now owns 2,775,459 shares of the oil and gas exploration company’s stock valued at $68,360,000 after acquiring an additional 15,580 shares during the last quarter. Ameriprise Financial Inc. increased its position in shares of Forestar Group by 232.9% in the second quarter. Ameriprise Financial Inc. now owns 529,863 shares of the oil and gas exploration company’s stock worth $10,597,000 after purchasing an additional 370,685 shares during the last quarter. Royal Bank of Canada raised its stake in Forestar Group by 2.2% in the fourth quarter. Royal Bank of Canada now owns 511,362 shares of the oil and gas exploration company’s stock valued at $12,594,000 after purchasing an additional 10,987 shares in the last quarter. Geode Capital Management LLC raised its stake in Forestar Group by 1.0% in the fourth quarter. Geode Capital Management LLC now owns 508,877 shares of the oil and gas exploration company’s stock valued at $12,536,000 after purchasing an additional 5,171 shares in the last quarter. Finally, Millennium Management LLC lifted its position in Forestar Group by 50.8% during the first quarter. Millennium Management LLC now owns 489,230 shares of the oil and gas exploration company’s stock valued at $10,342,000 after purchasing an additional 164,753 shares during the last quarter. Hedge funds and other institutional investors own 35.50% of the company’s stock.

Analysts Set New Price Targets

A number of equities analysts have recently commented on the company. Wall Street Zen lowered Forestar Group from a “buy” rating to a “hold” rating in a report on Friday, January 23rd. Weiss Ratings reiterated a “hold (c)” rating on shares of Forestar Group in a research note on Thursday, January 22nd. Zacks Research cut Forestar Group from a “strong-buy” rating to a “hold” rating in a report on Monday, March 30th. BTIG Research began coverage on Forestar Group in a research note on Monday, March 30th. They issued a “hold” rating for the company. Finally, Citigroup lifted their target price on Forestar Group from $36.00 to $38.00 and gave the company a “buy” rating in a report on Wednesday, January 28th. Two investment analysts have rated the stock with a Buy rating and four have assigned a Hold rating to the company’s stock. According to data from MarketBeat, the company presently has an average rating of “Hold” and an average price target of $32.67.

Forestar Group Company Profile

Forestar Group Inc, headquartered in Austin, Texas, is a residential lot development and management company focused on delivering finished home sites to homebuilders across the United States. The company acquires, entitles and develops land for single-family and multi-family housing, managing zoning, infrastructure and environmental approvals to prepare lots for construction. Forestar’s integrated approach to land development spans from initial site acquisition through final lot delivery, providing homebuilders with ready-to-build parcels in a variety of markets.

In addition to lot development, Forestar operates a retail homebuilding segment through joint ventures and strategic partnerships with national and regional homebuilders.