Forestar Group Inc. (NYSE: FOR)

Sector: Real Estate Industry: Real Estate - Development CIK: 0001406587
Market Cap 1.53 Bn
P/B 0.86
P/E 9.16
P/S 0.91
ROIC (Qtr) 6.13
Div Yield % 0.00
Rev 1y % (Qtr) 9.03
Total Debt (Qtr) 793.20 Mn
Debt/Equity (Qtr) 0.44
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About

Forestar Group Inc., a Delaware corporation, operates in the real estate industry with its common stock listed on the New York Stock Exchange (NYSE) under the ticker symbol FOR. The company's primary business activities encompass land development, lot sales, and land banking. Forestar conducts its operations in the United States, focusing on acquiring and developing land to sell finished single-family residential lots to homebuilders. The real estate segment serves as Forestar's primary source of revenue, involving the acquisition, development,...

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Investment thesis

Bull case

  • Operating cash flow of 95.30M provides strong 12.22x coverage of stock compensation 7.80M, indicating sustainable incentive practices.
  • Strong tangible asset base of 3.18B provides 4x coverage of total debt 793.20M, indicating robust asset backing and low credit risk.
  • Cash reserves of 211.70M provide comfortable 2.42x coverage of tax obligations 87.40M, showing strong fiscal management.
  • Retained earnings of 1.06B represent substantial 0.59x of equity 1.79B, indicating strong internal capital generation.
  • Cash position of 211.70M fully covers payables of 80.10M by 2.64x, showing strong vendor relationship management.

Bear case

  • Free cash flow of 97.50M provides weak coverage of capital expenditures of (2.20M), with a -44.32 ratio suggesting additional external financing needs for growth initiatives.
  • Operating cash flow of 95.30M provides minimal 1.85x coverage of tax expenses of 51.40M, suggesting potential tax planning inefficiencies or unsustainable tax positions.
  • Operating cash flow of 95.30M barely covers operating expenses of (4.50M) with a -21.18 ratio, suggesting thin operational efficiency margins and limited flexibility.
  • Free cash flow of 97.50M represents just -9.85x of debt issuance (9.90M), suggesting concerning reliance on leverage rather than internal cash generation for growth.
  • R&D investment of 0 represents just 0x of SG&A expenses of 154.90M, indicating potential underinvestment in innovation relative to administrative overhead.

Peer comparison

Companies in the Real Estate - Development
S.No. Ticker Company Market Cap P/E P/S Total Debt (Qtr)
1 VTMX Vesta Real Estate Corporation, S.A.B. de C.V. 11.83 Bn 120.68 43.52 1.45 Bn
2 CCS Century Communities, Inc. 2.20 Bn 14.92 0.53 1.44 Bn
3 FOR Forestar Group Inc. 1.53 Bn 9.16 0.91 0.79 Bn
4 FPH Five Point Holdings, LLC 0.38 Bn 4.01 1.95 0.44 Bn
5 SKYH Sky Harbour Group Corp 0.19 Bn -44.25 7.89 0.35 Bn
6 OZ Belpointe PREP, LLC 0.19 Bn -5.15 26.12 0.26 Bn
7 JFB JFB Construction Holdings 0.16 Bn -53.12 7.47 0.00 Bn
8 SDHC Smith Douglas Homes Corp. 0.16 Bn 14.38 0.16 0.05 Bn

Industry comparisons

Current Valuation Value Ind Avg Percentile
EV to Assets EV to Assets 0.61 1.43
EV to Cash from Ops. EV/CFO 20.47 3.32
EV to Debt EV to Debt 2.46 296.38
EV to EBIT EV/EBIT 8.94 -7.88
EV to EBITDA EV/EBITDA 9.00 -0.77
EV to Free Cash Flow [EV/FCF] EV/FCF 20.01 -6.68
EV to Market Cap EV to Market Cap 1.28 1.29
EV to Revenue EV/Rev 1.16 10.93
Price to Book Value [P/B] P/B 0.86 2.09
Price to Earnings [P/E] P/E 9.16 6.45
Dividend Metrics Value Ind Avg Percentile
Dividend Coverage Ratio Dividend Coverage Ratio 0.00 -24.67
Dividend Payout Ratio % Div Payout % (Qtr) 0.00 23.30
Dividend per Basic Share Div per Share (Qtr) 0.00 0.13
FCF Dividend Payout Ratio % FCF Div Payout % (Qtr) 0.00 -3.13
Interest Coverage Int. cover (Qtr) 0.00 -12.63
Growth Metrics Value Ind Avg Percentile
Capex Growth (1y) % Capex 1y % (Qtr) -70.67 -104.71
Cash and Equivalents Growth (1y) % Cash & Equiv 1y % (Qtr) 60.38 29.52
Dividend Growth (1y) % Dividend Growth (1y) % 0.00 -0.47
EBIAT Growth (1y) % EBIAT 1y % (Qtr) -8.25 -5.81
EBITDA Growth (1y) % EBITDA 1y % (Qtr) -4.75 -36.06
EBIT Growth (1y) % EBIT 1y % (Qtr) -9.42 7.48
EBT Growth (1y) % EBT 1y % (Qtr) -9.42 -2.06
EPS Growth (1y) % EPS 1y % (Qtr) -8.64 -8.78
FCF Growth (1y) % FCF 1y % (Qtr) 121.95 109.52
Gross Profit Growth (1y) % Gross Profit 1y % (Qtr) 6.44 34.01
Liquidity Ratios Value Ind Avg Percentile
Asset Utilization Ratio Asset Util Ratio (Qtr) 0.53 0.42
Cash Payout Ratio Cash Payout (Qtr) 0.00 0.03
Cash Ratio Cash Ratio 0.00 0.96
Current Ratio Current Ratio 0.00 1.61
Debt to Equity Ratio Debt/Equity (Qtr) 0.44 0.97
Interest Cover Ratio Int Coverage (Qtr) 0.00 -12.63
Times Interest Earned Times Interest Earned (Qtr) 0.00 -12.63
Profitability Value Ind Avg Percentile
EBITDA Margin % EBITDA Margin % (Qtr) 13.20 6.42
EBIT Margin % EBIT Margin % (Qtr) 12.95 35.19
EBT Margin % EBT Margin % (Qtr) 12.95 -40.37
Gross Margin % Gross Margin % (Qtr) 21.60 29.45
Net Profit Margin % Net Margin % (Qtr) 9.90 -51.49