Where to Next For Beazer Homes USA Stock?

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Written By Faith Boluwatife

Beazer Homes is a prominent homebuilder in the U.S., currently facing a mix of challenges and opportunities in the housing market. Despite a tough economic environment characterized by rising interest rates and high inflation, Beazer Homes has shown resilience and has delivered impressive returns for its investors.

Recent Performance

Credits: DepositPhotos

Beazer Homes USA has experienced significant fluctuations in its financial performance over the past few years. In the fiscal year 2023, the company reported revenues of $2.21 billion, a 4.8% decline from $2.32 billion in 2022.

This decrease was driven by a reduction in the number of home closings, which fell from 4,756 in 2022 to 4,246 in 2023, despite an increase in the average sales price from $484,100 to $517,800.

The company’s net income also saw a decline, dropping from $220.7 million in 2022 to $158.6 million in 2023. This reduction in profitability was primarily due to inflationary pressures and lower sales volume.

However, Beazer Homes managed to more than double its operating cash flow from $81.1 million to $178.1 million during this period, though adjusted operating cash flow fell from $298.1 million to $204.3 million.

Current Fiscal Year Insights

In the first half of the fiscal year 2024, Beazer Homes reported revenues of $928.4 million, down 6.1% from $988.8 million in the same period the previous year. The number of closings decreased from 1,896 homes to 1,787 homes, and the average selling price dropped slightly from $520,100 to $514,600.

Despite the revenue decline, net income for the period increased modestly from $59 million to $60.9 million.

For the second quarter of 2024, the company reported revenues of $541.5 million, nearly flat compared to $543.9 million in Q2 2023. The average selling price per home rose from $509,900 to $515,900, and net income increased from $34.7 million to $39.2 million.

However, operating cash flow, adjusted operating cash flow, and EBITDA all experienced declines year over year.

Indicators of Improvement

Several key indicators suggest that Beazer Homes is positioned for future growth. Notably, the company’s backlog at the end of Q2 2024 increased to 2,046 homes, up from 1,711 at the end of 2023. Additionally, net new orders for the first half of 2024 were 2,122 homes, significantly higher than the 1,663 homes ordered in the first half of 2023.

For Q2 2024 alone, net new orders rose to 1,299 homes from 1,181 homes in the same period the previous year.

The company’s cancellation rate has also improved, dropping from 20.3% in 2023 to 15% in Q2 2024. In the most recent quarter, the cancellation rate was just 12.2%, compared to 18.6% in Q2 2023.

Valuation Metrics

Beazer Homes USA remains attractively priced based on several valuation metrics. If we annualize the first half of 2024 results, we would expect net profits of approximately $163.7 million, adjusted operating cash flow of $179 million, and EBITDA of $240.9 million.

This positions the company with a price-to-earnings ratio of 5.2, a price-to-operating cash flow ratio of 4.8, and an EV/EBITDA ratio of 7.1.

Compared to its peers, Beazer Homes is undervalued:

  • Legacy Housing Corporation (LEGH) trades at a P/E ratio of 10.8, a P/OCF ratio of 44.3, and an EV/EBITDA ratio of 8.1.
  • Meritage Homes (MTH) trades at a P/E ratio of 7.7, a P/OCF ratio of 19.5, and an EV/EBITDA ratio of 6.0.
  • Century Communities (CCS) trades at a P/E ratio of 8.9, a P/OCF ratio of 74.7, and an EV/EBITDA ratio of 8.8.
  • Lennar (LEN) trades at a P/E ratio of 10.7, a P/OCF ratio of 9.4, and an EV/EBITDA ratio of 7.5.
  • KB Home (KBH) trades at a P/E ratio of 9.2, a P/OCF ratio of 5.4, and an EV/EBITDA ratio of 8.1.


Credits: DepositPhotos

Beazer Homes USA has demonstrated strong performance amidst a challenging economic environment. The company’s ability to increase its backlog and net new orders, coupled with improving cancellation rates, indicates robust underlying demand.

Despite recent revenue declines, the company’s valuation remains attractive, especially compared to its peers.



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