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Category: Stock Market and Beazer Home
Date: 19 September 2019 Stock Price: $13.97 We take a look at the 3rd quarter earnings release of their 2019 fiscal year of Beazer Homes one of America's largest homebuilders.
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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.
The image below shows some of Beezer's main principles
The image below shows some of Beezer's main principles
Overview of Beazers' latest earnings report
The numbers we are interested in (for the quarter):
- Revenues: $482.738 million (down from $511.521 million from the same quarter of the previous year)
- Revenues decreased by -4.84% over the last 12 months
- Home construction and sales expenses: $410.974 million (down from $429.109 million for the same quarter of the previous year)
- Sales expenses decreased by -4.2% over the last 12 months
- Net income: $11.602 million (down from $13.409 million loss for the same quarter of the previous year)
- Diluted earnings per share: $0.38 (down from $0.42 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 30.489 million (down from 32.726 million for the same quarter of the previous year)
- Cash and cash equivalents: $68.491 million
- Cash and cash equivalents per share: $2.24
- Cash and cash equivalents makes up 16.1% of Beazer Homes' market capital
- Cash and cash equivalents makes up 3.23% of Beazer Homes' total assets
- Owned inventory: $1.702 billion
- Owned inventory makes up 80.2% of Beazer Homes' total assets
Beazer Homes' management commentary on the results and earnings guidance
ATLANTA--(BUSINESS WIRE)--Aug. 1, 2019-- Beazer Homes USA, Inc. (NYSE: BZH) (www.beazer.com) today announced its financial results for the three and nine months ended June 30, 2019.
“We are pleased to report strong third quarter results that once again exceeded or met our expectations across our key metrics,” said Allan P. Merrill, President and CEO of Beazer Homes. “During the quarter, a continuation of wage growth, low unemployment and lower interest rates provided support for our solid sales and earnings performance. We also executed against our capital allocation priorities by repurchasing $16.6 million of debt and $10.6 million of common stock. We remain committed to full year debt reduction in excess of our share repurchases and now expect to repurchase more than $50.0 million in debt during fiscal 2019.”
“As we look ahead, our balanced growth strategy positions us to achieve higher EBITDA from a more efficient and less leveraged balance sheet. By generating higher returns, we will create enhanced value for our investors.”
Share and Debt Repurchases.
The Company retired $16.6 million of its outstanding 6.75% unsecured Senior Notes due March 2025 at an average price of $96.61 per $100 principal amount. We entered into an accelerated share repurchase (ASR) agreement during the quarter to repurchase $10.0 million of our outstanding common stock, which was completed during July 2019. A total of 1.0 million shares were purchased through the ASR at an average price per share of $9.87. In addition, the Company repurchased $0.6 million of shares through open market transactions during the quarter. Year to date, the Company has repurchased $21.7 million of debt and $34.6 million of stock.
Business Update released by Beazer Homes on 18 September 2019
ATLANTA--(BUSINESS WIRE)--Sep. 18, 2019-- Beazer Homes USA, Inc. (NYSE:BZH) (www.beazer.com) (the “Company”) today announced that its sales for the first two months of its fiscal fourth quarter were up 12.5% year over year. This increase was primarily related to a higher pace, as sales per community per month rose to 3.0 from 2.7 in the previous year. In addition, the Company continues to expect its fiscal fourth quarter backlog conversion ratio to be similar to the fourth quarter of the prior fiscal year.
The Company will report its full fourth quarter 2019 results in November and is not updating any additional guidance at this time.
“We are pleased to report strong third quarter results that once again exceeded or met our expectations across our key metrics,” said Allan P. Merrill, President and CEO of Beazer Homes. “During the quarter, a continuation of wage growth, low unemployment and lower interest rates provided support for our solid sales and earnings performance. We also executed against our capital allocation priorities by repurchasing $16.6 million of debt and $10.6 million of common stock. We remain committed to full year debt reduction in excess of our share repurchases and now expect to repurchase more than $50.0 million in debt during fiscal 2019.”
“As we look ahead, our balanced growth strategy positions us to achieve higher EBITDA from a more efficient and less leveraged balance sheet. By generating higher returns, we will create enhanced value for our investors.”
Share and Debt Repurchases.
The Company retired $16.6 million of its outstanding 6.75% unsecured Senior Notes due March 2025 at an average price of $96.61 per $100 principal amount. We entered into an accelerated share repurchase (ASR) agreement during the quarter to repurchase $10.0 million of our outstanding common stock, which was completed during July 2019. A total of 1.0 million shares were purchased through the ASR at an average price per share of $9.87. In addition, the Company repurchased $0.6 million of shares through open market transactions during the quarter. Year to date, the Company has repurchased $21.7 million of debt and $34.6 million of stock.
Business Update released by Beazer Homes on 18 September 2019
ATLANTA--(BUSINESS WIRE)--Sep. 18, 2019-- Beazer Homes USA, Inc. (NYSE:BZH) (www.beazer.com) (the “Company”) today announced that its sales for the first two months of its fiscal fourth quarter were up 12.5% year over year. This increase was primarily related to a higher pace, as sales per community per month rose to 3.0 from 2.7 in the previous year. In addition, the Company continues to expect its fiscal fourth quarter backlog conversion ratio to be similar to the fourth quarter of the prior fiscal year.
The Company will report its full fourth quarter 2019 results in November and is not updating any additional guidance at this time.
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 $18.60, and its currently trading at $13.97 a stock. Thats a negative return of -24.9% over the last 5 years. But its not all bad news for investors, the stock is trading at a lot closer to its 52 week high than it is to its 52 week low, which is a clear indication that the short term sentiment and momentum of the stock is positive. So perhaps this is the turning point for the group's stock price.
Beazer Homes (NYSE: BZH) latest stock valuation
So based on the earnings report of Beazer Homes (NYSE:BZH) and the latest earnings guidance provided what do we value Beazer Homes (BZH) stock at? Based on the earnings reported by the group our valuation model provides a target (full value) price for Beazer Homes at $19.20 a stock. 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 $19.20 Therefore we believe the stock remains a good buy below $17.30. Therefore the current price 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 $19.20 Therefore we believe the stock remains a good buy below $17.30. Therefore the current price 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.