One-glance verdict
Undervalued
$123.74 our estimate vs market $27.21
Wall Street consensus: $34.00 (-72.5% lower than our fair-value estimate)
78% below our estimate, below the bear case
Fundamentals snapshot
Forestar Group Inc.
FOR · NYQ · Real Estate · Real Estate - Development
Current price
$27.21
52-week range
$22.81 - $32.06
Market cap
$1.39B
Balance sheet
Healthy
33.19x Strong cushion
Net debt $415.30M. Interest coverage shows how many times profit covers the interest bill.
What stands out
3 Rewards
3 Risks
3 rewards · 3 risks
- Reward Revenue grew 3.8% last year.
- Reward Returns 9.6% on equity, ahead of 66% of its peers.
- Risk Forward P/E (9.5x) is higher than trailing (8.2x) - earnings are expected to drop.
- Risk Stock trades 19.4% above its 5-year average P/E.
What this company does
Forestar Group Inc.
Forestar Group buys large pieces of land and prepares them for new housing developments by adding roads and utilities. The company then sells these ready-to-build plots to homebuilders, with a majority of its sales going to its parent company (the firm that owns a controlling stake in it), D.R. Horton. This means Forestar's business success is closely tied to the overall health of the new home construction market.
How the company got here
Forestar's origins trace back to 1955 as Lumbermen's Investment Corporation. It became a publicly traded company on the New York Stock Exchange in 2007. A major turning point occurred in 2017 when D.R. Horton, the largest homebuilder in the U.S., acquired a majority ownership stake in the company. This partnership established a strategic relationship, making Forestar a key supplier of developed land lots to D.R. Horton. Before this, the company had a history in various real estate operations, including commercial development and even oil and gas, but has since focused exclusively on residential lot development.
What it actually does
Think of Forestar as the company that prepares the land before a house can be built. They don't build or sell houses themselves. Instead, they buy large pieces of raw land, do all the necessary prep work like getting permits, and then install the essential infrastructure (the basic physical systems of a community) like roads, sewers, and water lines. Once a plot of land, now called a "finished lot," is ready for a house to be built on it, Forestar sells it to homebuilders. Their customers range from large national builders to smaller local and regional ones.
Real Estate
The company operates as a single business, focusing entirely on residential lot development. This is their sole way of making money. They acquire land, secure the necessary legal rights and permissions for development, known as entitlements, and then prepare the sites for construction. Their main product is a fully prepped, buildable single-family homesite that they sell directly to homebuilding companies. This business model is capital-intensive (requires a lot of money upfront) because they have to invest heavily in buying and developing land before they can sell the finished lots.
What management is betting on now
Management's strategy is centered on becoming a dominant national supplier of residential lots. They are focused on expanding their operations across the country, particularly in high-growth housing markets, to meet the consistent demand from homebuilders. A key part of their plan is to maintain a strong relationship with their majority owner, D.R. Horton, which provides a steady and predictable source of demand for their lots. They are also investing heavily in land acquisition and development to ensure they have a large pipeline of future lots to sell, aiming to increase their market share in a fragmented industry.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$118.40M
FY2025 Q1
$-450.00M
FY2025 Q2
$-20.50M
FY2025 Q3
$15.00M
FY2025 Q4
$255.60M
FY2026 Q1
$-157.10M
FY2026 Q2
$151.70M
FY2026 Q3
$32.70M
Revenue
$407.00M
Net income
$35.90M
Diluted EPS
0.70
Operating cash flow
$32.70M
Free cash flow
$32.70M
Fetching…
Sources
Revenue
$374.30M
Net income
$32.10M
Diluted EPS
0.63
Operating cash flow
$151.90M
Free cash flow
$151.70M
Fetching…
Sources
Revenue
$273.00M
Net income
$15.40M
Diluted EPS
0.30
Operating cash flow
$-157.00M
Free cash flow
$-157.10M
Fetching…
Sources
Revenue
$670.50M
Net income
$86.90M
Diluted EPS
1.70
Operating cash flow
$256.30M
Free cash flow
$255.60M
Fetching…
Sources
Revenue
$390.50M
Net income
$32.90M
Diluted EPS
0.65
Operating cash flow
$15.80M
Free cash flow
$15.00M
Fetching…
Sources
Revenue
$351.00M
Net income
$31.60M
Diluted EPS
0.62
Operating cash flow
$-19.80M
Free cash flow
$-20.50M
Fetching…
Sources
Revenue
$250.40M
Net income
$16.50M
Diluted EPS
0.32
Operating cash flow
$-450.00M
Free cash flow
$-450.00M
Fetching…
Sources
Revenue
$551.30M
Net income
$81.50M
Diluted EPS
1.59
Operating cash flow
$119.20M
Free cash flow
$118.40M
Fetching…
Sources
Is it cheap or expensive?
Fair value $123.74 vs current price $27.21
Wall Street consensus is the average analyst price target: $34.00 (-72.5% lower than our fair-value estimate).
Our most-likely fair value is $123.74 a share — about 354.8% above today's price of $27.21, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net debt $415.3M. Interest coverage 33.2x.
Net debt
$415.30M
Interest coverage
33.19x
Forestar Group Inc.'s profit covers its interest bill about 33.2 times over. which is stronger than every peer shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
FOR
BASELINE
Forestar Group Inc.
Total debt $810.20M Interest coverage 33.19x This is the baseline the peer rows are being compared against.
Total debt $5.46B Interest coverage 1.78x -95% vs FOR Carries about 18.7x less debt cushion than FOR.
Total debt $469.20M Interest coverage -0.43x -100% vs FOR This peer has almost no interest-payment cushion compared with FOR.
Total debt $17.00K Interest coverage 7.15x -78% vs FOR Carries about 4.6x less debt cushion than FOR.
Total debt $551.48M Interest coverage 4.80x -86% vs FOR Carries about 6.9x less debt cushion than FOR.
What you should know
The case for and against FOR
3 Rewards
3 Risks
Rewards
-
Revenue grew 3.8% last year.
-
Returns 9.6% on equity, ahead of 66% of its peers.
-
Free cash flow was positive in 3/10 years.
Risks
-
Forward P/E (9.5x) is higher than trailing (8.2x) - earnings are expected to drop.
-
Stock trades 19.4% above its 5-year average P/E.
-
Operating margin compressed from 15.2% to 11.3% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
8.17x
Forward P/E
9.54x
P/B
0.75x
P/S
0.80x
EV/EBITDA
8.12x
PEG ratio
4.90x
Profitability
How much profit each dollar creates
Gross margin
21.4%
Operating margin
11.3%
Net margin
9.9%
ROE
9.6%
ROA
4.2%
Health
Liquidity and balance-sheet strength
Debt / equity
0.44x
Current ratio
2.07x
Quick ratio
1.85x
Total debt
$810.20M
Total cash
$394.90M
Growth
How the business has been compounding
Revenue TTM
$1.72B
Revenue 5Y CAGR
5.8%
EPS TTM
3.33
EPS 5Y CAGR
-2.9%
Cash flow
How much cash the business throws off
Operating CF TTM
$283.90M
Free CF TTM
$-199.90M
FCF margin
-11.6%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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