Forestar Group

FOR

Real Estate - Development · Real Estate

Price

$29.90

-1.02 (-3.30%)

Market Cap

$1.53B

Winston Score

Winston is curious

Mixed quality — meaningful strengths and weaknesses.

Share count rising — dilution

+3.9% over 4y

The company has issued more shares over this period, which dilutes each existing shareholder’s stake.

Diluted shares outstanding: 49.0M (2021) → 50.9M (2025)

Forestar Group Inc. is a residential land development company based in the United States. It buys raw land, develops it into finished lots, and sells those lots to homebuilders. The company operates as a majority-owned subsidiary of D.R. Horton, the largest homebuilder in the United States by volume.

Forestar makes money by purchasing undeveloped land, installing roads and utilities, and then selling the prepared lots — primarily to D.R. Horton. This close relationship with D.R. Horton gives Forestar a reliable customer base but also makes it heavily dependent on one buyer. The company operates across many U.S. states, focusing on high-growth housing markets in the Sun Belt and Southeast. The main growth driver is continued demand for new housing, but rising interest rates and a slowdown in homebuilding activity are the key risks, since fewer homes being built means fewer lots being purchased.

Winston Score History

Growth Profile

For growth stock investors

When traditional metrics don't capture the full picture, these are the signals growth stock investors use instead.

Revenue Growth

+6.6% YoY

YoY Growth Rate

Slow revenue growth

EPS Growth

+1.6% YoY

YoY Growth Rate

Slow EPS growth

R&D Spend

$0/ year

0.0% of revenue

Below sector average (1%)

Research and development spending

Insider Activity

62.2%ownership

→ Flat

Insiders holding steady — not selling despite ability to

Cash Position

Cash flow positive

$362M cash & investments

Quarterly Free Cash Flow

↑ Burn rate improving

Company generates more cash than it spends — no dilution risk from fundraising

Growth context

Forestar Group is growing revenue at 7% year-over-year. The Winston Score measures business quality today — these growth metrics show what could matter tomorrow.

The Winston Score above measures business quality today. Growth stocks often score lower because they invest in the future rather than maximising current profits. These metrics show what matters most for evaluating that future.

Score breakdown

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Quality

Gross Margin

21.4%

Thin — 21.4% gross margin

Operating Margin

11.3%

Modest — 11.3% operating margin

ROCE

1.6%

Weak — 1.6% return on capital

ROIC between 0% and 5%. They earn a few cents back per dollar invested in the business.

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Growth

Sales YoY

+21.0%

Fast-growing sales (21.0% YoY)

EPS YoY

+1.1%

Flat earnings

Single-digit earnings growth — steady but not exciting.

EPS Consistency

4/8 quarters

Earnings inconsistent quarter-to-quarter

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Cash Flow

Cash Conversion

220%

Turns 220% of profit into real cash

FCF Margin

22.5%

Converts sales into free cash efficiently (22.5%)

Free cash flow margin above 20%. Out of every $100 in sales, more than $20 is real cash they keep.

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Stability

Debt / Equity

0.44

Conservative — low debt load (0.44)

Interest Cover

100.00x

—

Comfortably covers interest (100.0x)

Interest coverage above 8. Profits cover interest many times over.

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Valuation

P/E Ratio (TTM)

8.3x

Attractive valuation — P/E 8.3

P/E under 10. The price tag is small relative to last year's profit.

P/E vs Forward

-2.2

SLOWING

Earnings expected to fall — forward P/E higher than today

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Dividends

Not applicable for this business.

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