Forestar Group Makes Analysts Look Bad

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Forestar Group (NYS: FOR) filed its 10-K on Wednesday. Here are the numbers you need to know.

The 10-second takeaway
For the quarter ended Dec. 31 (Q4), Forestar Group crushed expectations on revenues and beat expectations on earnings per share.

Compared to the prior-year quarter, revenue improved significantly, and GAAP earnings per share dropped to a loss. The non-GAAP profit was a surprise, as analysts had predicted a loss.

Gross margins dropped, operating margins grew, and net margins dropped.

Revenue details
Forestar Group logged revenue of $54 million. The two analysts polled by S&P Capital IQ looked for a top line of $26.4 million on the same basis. GAAP reported sales were much higher than the prior-year quarter's $22.9 million.

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Source: S&P Capital IQ. Quarterly periods. Dollar amounts in millions. Non-GAAP figures may vary to maintain comparability with estimates.

EPS details
Non-GAAP EPS came in at $0.17. The one earnings estimate compiled by S&P Capital IQ averaged -$0.08 per share on the same basis. GAAP EPS were -$0.65 for Q4 compared to $0.07 per share for the prior-year quarter.

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Source: S&P Capital IQ. Quarterly periods. Non-GAAP figures may vary to maintain comparability with estimates.

Margin details
For the quarter, gross margin was 62.4%, 250 basis points worse than the prior-year quarter. Operating margin was 20.6%, 2,570 basis points better than the prior-year quarter. Net margin was -42.4%, 5,310 basis points worse than the prior-year quarter.

Looking ahead
Next quarter's average estimate for revenue is $57.0 million. On the bottom line, the average EPS estimate is $0.11.

Next year's average estimate for revenue is $267.0 million. The average EPS estimate is $0.43.

Investor sentiment
The stock has a three-star rating (out of five) at Motley Fool CAPS, with 66 members rating the stock outperform and 24 members rating it underperform. Among 22 CAPS All-Star picks (recommendations by the highest-ranked CAPS members), 18 give Forestar Group a green thumbs-up, and four give it a red thumbs-down.

Of Wall Street recommendations tracked by S&P Capital IQ, the average opinion on Forestar Group is buy, with an average price target of $24.

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At the time this article was published Seth Jayson had no position in any company mentioned here at the time of publication. You can view his stock holdings here. He is co-advisor ofMotley Fool Hidden Gems, which provides new small-cap ideas every month, backed by a real-money portfolio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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