with the good news from Horton today BZH should be up a lot more today. When BZH announces numbers back to $18-20 we go. IMHO BZH is worth north of $30 today. It is beyond me why this stock trades this cheap. ALL JMHO.
Great opportunity IMHO when spring comes. IMHO stock is worth double from here on fundamentals. Take advantage of the dumb money sellers today and BUY if you think BZH is undervalued.
BZH has included tax credits in income calculations. Without the tax credits in 2014, BZH would post losses for FY14 ending in September 2014. BZH is a looser--Sell. Home sales got weaker in recent months--Sell. The world economy is in recession, and USA will weaken too--Sell.
I have read that this number is the one to watch. With housing stocks down right now in the off season it is my opinion the time to consider this industry or add to ones position. Earnings for Q4 and Q1 are the slowest for the year, thus a great time to consider housing stocks for the upcoming spring. As oil prices decline, putting more money into the pockets of consumers, housing should improve, add in that rents are increasing and 2015 could be the break out year for builders. I hold BZH and with a Price to Sales at a huge discount right now feel this is the one to own for 2015. Lots of upside in pricing through the next at least seven months IMHO. As a holder of BZH I wouldn't consider selling my share until at the least, the price to sales number would hit 1.5. To me this is a cheap stock with a lot of potential as housing continues its comeback. IMHO SHORT term by June $35 per share is doable if fundamentals of the company continue to improve and housing starts move up as they should do to the FED's move to raise rates some time during the June-August period. Many will want to lock in todays cheap rates before then IMHO.
Well that is your first mistake...., following cramer. No doubt cramer may be short with that call if he even made it. Looking at improving new home orders BZH will be just fine and could even double from here in 2015.
Do not be misled by posts comparing HOV to BZH. The Balance Sheet is the issue with HOV.
HOV’s “over debt”, combined with a mountain of Preferred Stock standing between earnings and the common stock, is the issue.
BZH has $ 1.5 B in debt, $ 1.5 B in inventory, and $ 387 M in cash . BZH effectively borrows money at 7% and turns it into a 22% return (margin) by building homes. 100% of that return goes to shareholders (after SG&A).
HOV (July 31) had ~ $ 1.7 B in debt, $ 1.4 B inventory, $ 190 M in cash, and an annualized interest expense of ~ $ 142 Mil.
As if that were not bad enough, HOV has a mountain of preferred stock ( see HOVNP), which is paid with expensive after tax dollars, before any remaining scraps can go to common shareholder. BZH has no preferred stock.
As for the future, I can see BZH going from its anticipated 2015 interest expense of $ 35 M to zero by Y/E 2016 as the last of their expensive debt gets off loaded or goes above the line ( i.e. refi the $ 235 M 2019 9 1/8% notes in 2015, pay off the $ 173 M 2016 8 1/8% notes from cash in 2016, as well as the ongoing move of interest into inventory based on revenue increases). The point being, good balance sheet management
alone will eventually provide an additional $ 1 in EPS for BZH shareholders.
The BZH earnings webcast (posted on their website) provides guidance for 2015 revenue growth in the mid teens, a margin of 22%, SGA of 12.5% , and 35 mil. interest expense.
Using a 2015 revenue estimate of 1.6 Bil., applying their expense guidance, and adding depreciation/amortization at the $ 13 m annual run rate translates into a net income of $ 104 million or $ 3.12 per share.
Since they have a $ 440 mil. tax loss carry forward, there should be no tax.
The only unusual expense in 2015 may be a debt extinguishment expense to refi the $ 230 million of May 2019 9 1/ 8% notes. Even if that costs $ 15 mil, the EPS would only drop to $ 2.70.
Using an 18 P/E valuation multiple would put the stock price at $ 48 per share at Y/E 2015.
Can someone please double check my math.
Also, if my math is correct, can someone please explain to me why the two big low ballers ( JP Morgan at $ 18.50 and Citigroup at $ 19) are doing so? I have to believe they know how to do math, so what are their motives for low balling the stock price?
The earnings "surprise" was priced in. The "items" that lowered income are also disturbing. Home warranty issues with water intrusion might not be a one-time event but a preview of things to come. Whether or not it's part of a pattern of poor workmanship, plaintiffs' attorneys might smell blood in the water and converge on BZH looking for lucrative settlements.
Why does anyone even own this company? No dividend, and you pay $16 per share for the privilege of losing money and watching the stock price go down.
If it doesn't get much better, I'm bailing. The market's up, home builders are up, and Beazer is down. Maybe being the odd one out, with negative EPS is a drag on us.