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Why Beazer Homes USA Stock Just Popped 33%

Rich Smith, The Motley Fool

What happened

Shares of Beazer Homes USA (NYSE: BZH) are up a good 33% as of 12:30 p.m. EST on Tuesday after the homebuilder reported big beats on both revenue and earnings in its fiscal fourth quarter 2018.

Earlier today Beazer announced it had earned $1.84 per share ($1.15 "adjusted" for one-time items) on total sales of $767.9 million. Wall Street had expected Beazer to earn only $1.01 per share and on sales of only $747.3 million.

Men in hard hats reading blueprints in front of a house

Beazer's beat helps build the case that its stock is a buy. Image source: Getty Images.

So what

Not only did Beazer beat expectations, but its results for the quarter were also objectively good.

Sales were up 14% year over year while earnings surged 79%. This was a nice way to end the year, with growth accelerating from the 10% pace set for 2018 as a whole. Q4 wasn't quite good enough, however, to pull Beazer entirely out of the sea of red ink it's bathed in all year long. Full-year "earnings" at the company still ended up at a $1.41-per-share loss.

Now what

Looking into next year, management noted that in fiscal 2019 it expects to deliver "improved profitability, with a growing community count and a higher average selling price."

Beazer is also hoping to pay down its debt a bit. At $1.2 billion net of cash, Beazer's debt load currently dwarfs its $350 million market cap. But with profits improving, management says it will be "committing capital to both stock and debt repurchases," helping to "generate a double-digit return on assets in the coming year."

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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.