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Category: Stock Market and Beazer Home
Date: 2 February 2020 Stock Price: $13.75 We take a look at the 1st quarter earnings release of their 2020 fiscal year of Beazer Homes one of America's largest homebuilders. The group received 1 112 new orders for homes during their 1st quarter 2020
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About Beazer Homes
Headquartered in Atlanta, Beazer Homes (NYSE:BZH) is one of the country’s largest homebuilders. Every Beazer home is designed and built to provide Surprising Performance, giving you more quality and more comfort from the moment you move in - saving you money every month. With Beazer’s Choice Plans™, you can personalize your primary living areas - giving you a choice of how you want to live in the home, at no additional cost. And unlike most national homebuilders, we empower our customers to shop and compare loan options. Our Mortgage Choice program gives you the resources to easily compare multiple loan offers and choose the best lender and loan offer for you, saving you thousands over the life of your loan. We build our homes in Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas, and Virginia.
Overview of Beazers' 1st quarter 2020 earnings report
The numbers we are interested in (for the quarter):
Homebuilding revenue (in thousands of dollars)
- Revenues: $417.804 million (up from $402.040 million from the same quarter of the previous year)
- Revenues increased by 3.9% over the last 12 months
- Home construction and sales expenses: $354,667 million (up from $340.378 million for the same quarter of the previous year)
- Sales expenses increased by -4.2% over the last 12 months
- So margins being squeezed a little for Beazer Homes as expenses increased at a faster rate than their revenues
- Net income: $2.746 million (down from $7.311 million loss for the same quarter of the previous year)
- Diluted earnings per share: $0.09 (down from $0.23 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 30.138 million (down from 32.055 million for the same quarter of the previous year)
- Cash and cash equivalents: $41.277 million
- Cash and cash equivalents per share: $1.36
- Cash and cash equivalents makes up 9.6% of Beazer Homes' market capital
- Cash and cash equivalents makes up 2.08% of Beazer Homes' total assets
- Owned inventory: $1.574 billion
- Owned inventory makes up 79.2% of Beazer Homes' total assets
- Stockholders equity in Beazer Homes: $539.280 million
- Stockholders equity per share in Beazer Homes: $17.89
- So Beazer Homes is trading at 0.76 times its stockholders equity per share. It is rather unusual to see a company trading at less than its stockholders equity per share. Most firms tend to trade at between 2 and 4 times its stockholders equity per share.
Homebuilding revenue (in thousands of dollars)
- West region: $254,398
- East region: $77,645
- Southeast region: $85,356
- Total homebuilding revenue: $417,399
Beazer Homes' management commentary on their 1st quarter 2020 earnings
ATLANTA--(BUSINESS WIRE)--Jan. 30, 2020-- Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three months ended December 31, 2019.
“We were very pleased with our first quarter results,” said Allan P. Merrill, Chairman and CEO of Beazer Homes. “Increases in both home sales and gross margins reflected improved consumer demand for new homes and our efforts to drive increases in profitability and returns. These results have enhanced our visibility and confidence in reaching our Fiscal 2020 goals of generating a return on assets above 10% and a double-digit growth rate in Adjusted EBITDA.
“We were very pleased with our first quarter results,” said Allan P. Merrill, Chairman and CEO of Beazer Homes. “Increases in both home sales and gross margins reflected improved consumer demand for new homes and our efforts to drive increases in profitability and returns. These results have enhanced our visibility and confidence in reaching our Fiscal 2020 goals of generating a return on assets above 10% and a double-digit growth rate in Adjusted EBITDA.
“Longer term, our focus on delivering ‘extraordinary value at an affordable price’, principally to first time and downsizing buyers, is ideally aligned with demographics and responsive to the challenge of providing affordable new homes. We remain confident in our ability to improve profitability and returns while reducing debt below $1 billion in the years ahead.”
Beazer Homes (NYSE:BZH) stock price history
The image below, obtained from Google, shows the stock price history of Beazer Homes (NYSE: BZH) over the last 5 years. And it's not been a good time for Beazer Homes stockholders. 5 years ago the stock was trading at around $15.90, and its currently trading at $13.75 a stock. Thats a loss of -13.9% suffered by Beazer Homes over the last 5 years.
The stock of Beazer Homes is trading at close to the midpoint between its 52 week high and 52 week low, which indicates that short term sentiment and momentum of Beazer Home's stock is neutral. However after the release of their 1st quarter 2020 earnings report Beazer stock plunged by -20.1%, and this could signal that sentiment towards their stock has turned very negative.
The stock of Beazer Homes is trading at close to the midpoint between its 52 week high and 52 week low, which indicates that short term sentiment and momentum of Beazer Home's stock is neutral. However after the release of their 1st quarter 2020 earnings report Beazer stock plunged by -20.1%, and this could signal that sentiment towards their stock has turned very negative.
Recent coverage of Beazer Homes
The extract below covers the stock price plunge of Beazer Homes after reporting this set of earnings results, as obtained from Fool.com
One day after Meritage Homes stock popped as much as 10% on a huge earnings beat on its fiscal fourth-quarter results, another homebuilder -- this time, Beazer Homes (NYSE:BZH) -- is tumbling twice that amount in response to... also an earnings beat! Last night after close of trading, Beazer Homes reported fiscal first-quarter 2020 earnings of $0.09 per share under generally accepted accounting principles (GAAP), where Wall Street had expected only $0.07. Sales for the quarter likewise trumped expectations, $417.4 million to Wall Street's $410 million.
And yet, Beazer stock is down 20.1% as of 11 a.m. EST.
So what
Let's dig into the numbers and see what they tell us.
CEO Allan P. Merrill said he was "very pleased with our first quarter results." In fiscal Q1, Beazer closed on 3% more home sales than in the year-ago quarter, and grew its "homebuilding revenue" by 4%, indicating that the homes Beazer built this year sold for higher prices than a year ago. Homebuilding gross margin on Beazer's sales held steady at 15.1%, while selling, general, and administrative costs declined by about 20 basis points to 13.3%. And yet, although better than analysts had predicted, Beazer's Q1 net income still declined 62% year over year.
Now what
That precipitous drop-off in profits may explain investors' decision to sell Beazer stock today. But Beazer also noted that it grew its orders for new housing by better than 28% in Q1, and as a result, the dollar value of homes in backlog has increased by 23%. On continued steady profit margins, that seems to foreshadow greater profits growth in the year ahead. Although I admit Beazer seems a riskier bet than Meritage -- if for no other reason then because Beazer stock is still unprofitable on a trailing-12-months basis, while Meritage is profitable -- the stock's strong growth prospects combined with its low price-to-book valuation (0.8 times) suggests to me that this stock could bounce back from today's sell-off in relatively short order.
Read the full article here
One day after Meritage Homes stock popped as much as 10% on a huge earnings beat on its fiscal fourth-quarter results, another homebuilder -- this time, Beazer Homes (NYSE:BZH) -- is tumbling twice that amount in response to... also an earnings beat! Last night after close of trading, Beazer Homes reported fiscal first-quarter 2020 earnings of $0.09 per share under generally accepted accounting principles (GAAP), where Wall Street had expected only $0.07. Sales for the quarter likewise trumped expectations, $417.4 million to Wall Street's $410 million.
And yet, Beazer stock is down 20.1% as of 11 a.m. EST.
So what
Let's dig into the numbers and see what they tell us.
CEO Allan P. Merrill said he was "very pleased with our first quarter results." In fiscal Q1, Beazer closed on 3% more home sales than in the year-ago quarter, and grew its "homebuilding revenue" by 4%, indicating that the homes Beazer built this year sold for higher prices than a year ago. Homebuilding gross margin on Beazer's sales held steady at 15.1%, while selling, general, and administrative costs declined by about 20 basis points to 13.3%. And yet, although better than analysts had predicted, Beazer's Q1 net income still declined 62% year over year.
Now what
That precipitous drop-off in profits may explain investors' decision to sell Beazer stock today. But Beazer also noted that it grew its orders for new housing by better than 28% in Q1, and as a result, the dollar value of homes in backlog has increased by 23%. On continued steady profit margins, that seems to foreshadow greater profits growth in the year ahead. Although I admit Beazer seems a riskier bet than Meritage -- if for no other reason then because Beazer stock is still unprofitable on a trailing-12-months basis, while Meritage is profitable -- the stock's strong growth prospects combined with its low price-to-book valuation (0.8 times) suggests to me that this stock could bounce back from today's sell-off in relatively short order.
Read the full article here
Beazer Homes (NYSE: BZH) latest stock valuation
So based on the earnings report of Beazer Homes (NYSE:BZH) what do we value Beazer Homes (BZH) stock at? Based on the earnings reported by the group our valuation model provides a target price (full value price) for Beazer Homes at $17.89 a stock (down slightly from our 3rd quarter 2019 earnings report valuation of Beazer Homes). We therefore believe the stock of Beazer Homes is undervalued
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $17.89 Therefore we believe a good entry point into the stock of Beazer Homes is at $16.10 or below. Therefore the current price of Beazer Homes is a good entry point into the stock based on our valuation models. But it should be noted that a slowing US economy might depress short term demand for new homes and investors should take this into account when looking to enter the stock.
We usually suggest long term fundamental and value investors look to enter the stock at least 10% below our target price, which in this case is $17.89 Therefore we believe a good entry point into the stock of Beazer Homes is at $16.10 or below. Therefore the current price of Beazer Homes is a good entry point into the stock based on our valuation models. But it should be noted that a slowing US economy might depress short term demand for new homes and investors should take this into account when looking to enter the stock.
Next earnings release of Beazer Homes
It is expected that Beazer Homes will release their 2nd quarter 2020 earnings report in early May 2020