By my conservative assumptions, I value Beazer's assets at the following amounts:
Cash is cash, so its value is $128 million. Inventory is one of the problems. With further writedowns, assuming 80 cents on the dollar, inventory is worth $2.64 billion. Accounts receivable, after some charges, are worth $60 million. Goodwill is worth zero. PPE would probably fetch around $18 million to $20 million in a fire sale. Mortgages, at 80 cents on the dollar, are worth about $8.2 million. Other assets, namely joint-venture investments and deferred tax assets at 85 cents on the dollar, are worth $112 million. The revalued assets come to approximately $3 billion, leaving an equity value of just above $400 million, or about $10.25 per share in book value, versus today's stock price of around $12.50 a share. These valuations are merely assumptions based on my assessment of the overall industry's economics, and they serve only to illustrate that the plunge in prices assumes further writedowns and, hence, a reduction in book value. To properly assess most homebuilders, a similar balance-sheet analysis would need to be done to fairly compare all of the companies.
I just read that Motley Fool piece and its very good. Assuming the worst is what they did so at these prices paying a buck and change over book looks like a risk worth taking. Paying the dividend surprised me but if they believe they have the ability to do it and still be in a comfortable position then its possible they are indicating things will get a bit better down the road. July might have been not so bad a month but who knows. Really depends on what mkts you operate in and what your exposure is. I live in Atlanta and we are down but we never got the absurd appreciation that other areas of the country got to like Florida for example. I know some local builders who have been around a long time, they are still building houses just 40% less of them and don't forget these guys were printing it for years. This industry will consolidate I am 53 and I remember the last downturn which lasted a while but the strong ones came out on top.