The Bull Case For Forestar Group (FOR) Could Change Following Strong Lot Sales Momentum And Backlog Trends

• Forestar Group recently reported continued momentum in lot sales and profitability, supported by strong demand from homebuilder customers and resilient margins in the U.S. housing market.
• The company also highlighted a healthy backlog of controlled lots and steady community openings with its primary homebuilder partner, reinforcing confidence in its integrated land development model.
• We’ll now examine how this continued momentum in lot sales and profitability could influence Forestar Group’s broader investment narrative.

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Forestar Group Investment Narrative Recap

To own Forestar Group, you need to believe its integrated land development model can keep converting strong lot demand into consistent earnings, despite exposure to U.S. housing conditions and D.R. Horton concentration. The latest update on healthy lot sales, resilient margins and a solid controlled-lot backlog supports the near term catalyst of sustained lot deliveries, while only modestly easing the key risk that any slowdown or shift in D.R. Horton’s purchasing could hit revenues.

Among recent announcements, the updated fiscal 2025 guidance of 14,500 to 15,000 lot deliveries with US$1.50 billion to US$1.55 billion in revenue is most relevant here. It ties the reported strength in demand and backlog directly to near term execution, giving investors a clearer line of sight on how Forestar’s lot sales momentum could translate into actual volumes and cash generation, even as concentration risk with its primary homebuilder partner remains front of mind.

But beneath the solid lot sales story, investors should be aware of how dependent Forestar still is on...

Read the full narrative on Forestar Group (it's free!)

Forestar Group's narrative projects $1.9 billion revenue and $155.2 million earnings by 2028. This requires 7.8% yearly revenue growth and an earnings decrease of $7.4 million from $162.6 million today.

Uncover how Forestar Group's forecasts yield a $32.50 fair value, a 31% upside to its current price.

Exploring Other Perspectives

Two fair value estimates from the Simply Wall St Community span a wide range, from about US$7.61 to US$32.50 per share, underscoring how far apart individual views can be. When you set this against Forestar’s reliance on D.R. Horton for a large share of lot sales, it becomes clear why different investors may weigh the same concentration risk very differently and why it can pay to compare several independent viewpoints.

Explore 2 other fair value estimates on Forestar Group - why the stock might be worth less than half the current price!

Build Your Own Forestar Group Narrative

Disagree with existing narratives? Create your own in under 3 minutes - extraordinary investment returns rarely come from following the herd.

• A great starting point for your Forestar Group research is our analysis highlighting 4 key rewards that could impact your investment decision.
• Our free Forestar Group research report provides a comprehensive fundamental analysis summarized in a single visual - the Snowflake - making it easy to evaluate Forestar Group's overall financial health at a glance.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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