Why Beazer Homes Shares Built a Big Pop Today
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Beazer Homes are up over 10% today in spite of a mixed earnings report, as investors seem more interested in big revenue growth than in steep losses at the moment.
So what: Beazer reported revenue of $287.9 million, which was a 50% year-over-year improvement, but posted a loss of $0.78 per share. The top-line number came in well ahead of Wall Street's expectation of $254.3 million, but Beazer's loss was $0.08 worse than the $0.70 loss per share analysts sought. More optimistically, Beazer now expects to turn a profit in the fourth quarter, which was "an unexpected positive catalyst" according to Jay McCanless of Sterne Agee. McCanless raised his price target to $22 per share, a 19% upside from today's close. The note of a substantially higher backlog in that profit forecast also cheered the market.
Now what: Beazer is inching toward profitability, but it isn't there yet. Consider that it will take $0.62 in earnings per share to give Beazer a P/E of 30, once it reaches McCanless' price target. That would be a major turnaround from today's report, but who knows -- it might be possible next year. This could be a catalyst for the stock to break out of its flat trading range, but it's worth investigating whether or not such a move would be justified over the long term.
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The article Why Beazer Homes Shares Built a Big Pop Today originally appeared on Fool.com.Fool contributor Alex Planes holds no financial position in any company mentioned here. Add him on Google+ or follow him on Twitter @TMFBiggles for more insight into markets, history, and technology.The Motley Fool has no position in any of the stocks mentioned. 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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