Beazer Homes USA, Inc. (NYSE:BZH) defied analyst predictions to release its first-quarter results, which were ahead of market expectations. Beazer Homes USA beat earnings, with revenues hitting US$418m, ahead of expectations, and statutory earnings per share outperforming analyst reckonings by a solid 20%. Following the result, analysts have updated their earnings model, and it would be good to know whether they think there's been a strong change in the company's prospects, or if it's business as usual. With this in mind, we've gathered the latest statutory forecasts to see what analysts are expecting for next year.
Taking into account the latest results, the current consensus from Beazer Homes USA's twin analysts is for revenues of US$2.16b in 2020, which would reflect a credible 2.9% increase on its sales over the past 12 months. Beazer Homes USA is also expected to turn profitable, with statutory earnings of US$1.67 per share. Before this earnings report, analysts had been forecasting revenues of US$2.18b and earnings per share (EPS) of US$1.86 in 2020. So it looks like there's been a small decline in overall sentiment after the recent results - there's been no major change to revenue estimates, but analysts did make a small dip in their earnings per share forecasts.
The average analyst price target fell 5.9% to US$16.00, with reduced earnings forecasts clearly tied to a lower valuation estimate.
It can also be useful to step back and take a broader view of how analyst forecasts compare to Beazer Homes USA's performance in recent years. It's pretty clear that analysts expect Beazer Homes USA's revenue growth will slow down substantially, with revenues next year expected to grow 2.9%, compared to a historical growth rate of 7.1% over the past five years. By way of comparison, other companies in this market with analyst coverage, are forecast to grow their revenue at 5.3% per year. Factoring in the forecast slowdown in growth, it seems obvious that analysts still expect Beazer Homes USA to grow slower than the wider market.
The Bottom Line
The biggest concern with the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds could lay ahead for Beazer Homes USA. On the plus side, there were no major changes to revenue estimates; although analyst forecasts imply revenues will perform worse than the wider market. Analysts also downgraded their price target, suggesting that the latest news has led analysts to become more pessimistic about the intrinsic value of the business.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. At least one analyst has provided forecasts out to 2021, which can be seen for free on our platform here.
You can also see whether Beazer Homes USA is carrying too much debt, and whether its balance sheet is healthy, for free on our platform here.
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