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A Technical Look as Beazer Beats on Earnings, Targets Profitability in Fiscal 2014

By  +Follow August 1, 2013 8:16AM
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Despite posting a net loss for the recent quarter, Beazer Homes USA Inc. (BZH) , a top ten U.S. homebuilder, believes that it is on a path to record its first profitable fiscal year in almost a decade next year as average home price sales are improving and margins are widening.

For the fiscal third quarter ended June 30, Beazer reported total revenue of $314.44 million, up from $254.56 million in the third quarter last year.  Net loss for the quarter contracted to $5.79 million, or 22 cents per share, from $39.89 million, or $1.92 per share, in the year prior quarter.

Wall Street was expecting a net loss of 37 cents per share on revenue of $332 million.

The Atlanta-based company blamed an expected decline in community count for an 11.2 percent year-over-year decline in third-quarter orders (from 1,555 to 1,381), but said it “expects a materially higher community count by the end of Fiscal 2014.”  For the first nine months of fiscal 2013, orders are up by 1.1 percent at 3,834 compared to the same period last year.

On the sunny side, adjusted EBITDA rose five-fold to $21.8 million for the quarter, up from $4.0 million in the third quarter of Fiscal 2012.

For the quarter, the average sales price from closing increased almost 12 percent, from $227,300 last year to $253,800.  Total home closings were up 11.3 percent to 1,234 from 1,109 last year.

Gross margin, not including impairments and abandonments, jumped from 10.5 percent last year to 17.1 percent in the latest quarter.  Gross profit improved to $54.12 million from $21.23 million.

Cancellation rates fell by 450 basis points to 20 percent.

Backlog at the end of the quarter was 2,358 units with a sales value of $646.1 million, down by 61 units from the end of Q3 last year, but up in value by $73.3 million.

Ultra-low interest rates, that in some markets make it cheaper to buy than rent, coupled with banks loosening their purse strings a bit, have helped the housing market make a strong recovery for just over a year now.  Last week, the Commerce Department said that new home sales climbed to a five-year high in June as sales of single-family units improved 8.3 percent to a 497,000 annualized rate.

Technically speaking, the BZH chart can have some particular appeal when viewed from the longer term.  First, a look at the 6-month chart…not particularly impressive, other than sitting not far off a support level at $16.50.

 

 

However, zooming out to a 30-month chart shows the reversal that the stock price has made since falling from over $30 per share early in 2011 to a low of $6.73 in October 2011 (prices adjusted for a 1-for-5 reverse split that month).  From this perspective, Beazer may be sitting in an attractive position.  Closing at $17.19 on Wednesday, the upside to static resistance at $20 is greater than 16 percent.  To continue the upward path, especially if the company can hit its profitability goal next year, the headroom is obviously far greater.

 

That’s the technical look.  Now, it’s important to remember that resurgence in the housing sector has been fueled in part by the efforts of the Federal Reserve.  The impact of inevitable tapering – and eventual ending – of QE3 has yet to be determined.  Rising interest rates, pent-up demand subsiding or a slowdown in the economy can cause the housing recovery to grind to a much slower pace.  Things look strong at the moment, but there are still risks that must be considered.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions.


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Results for BZH
Bret Jensen
18 Sep 14 11:11:53
Commented on: "My Contrarian Play On Housing Is Starting To Pay Off" http://t.co/nRKmF426od $BZH $LEN $TPH $UCP
TalkMarkets
18 Sep 14 08:33:11
#Stock Market News For September 18, 2014 $LEN $DHI $GE $BAC $BZH $PHM http://t.co/9Ru4tnJy6L
Market Int Center
18 Sep 14 05:40:52
Beazer Homes USA $BZH Trading Near $19.81 Resistance Level ( http://t.co/69yiY2PwQM )
Aliaa Bassiouny
17 Sep 14 11:42:39
RT @SeekingAlpha: My Contrarian Play On Housing Is Starting To Pay Off http://t.co/RpO0mbqLDr $BZH $LEN $TPH $UCP $XHB $TOL $WY
Seeking Alpha
17 Sep 14 10:40:42
My Contrarian Play On Housing Is Starting To Pay Off http://t.co/RpO0mbqLDr $BZH $LEN $TPH $UCP $XHB $TOL $WY
monestsignalen
17 Sep 14 08:47:03
Nieuwe bull flags #aandelen http://t.co/TRh8enkcGB $DRC $JKS $BZH
ChartMill
17 Sep 14 08:39:03
today's bull flags http://t.co/KC3iLsq8ew #stocks $DRC $JKS $BZH
Day Trade Alerts
17 Sep 14 07:07:24
via #AlertTrade Price Action Alert $BZH - BEAZER HOMES USA #stocks #intraday http://t.co/VS8RO1bzXJ
Market Int Center
16 Sep 14 10:36:08
Beazer Homes USA $BZH Showing Resistance Near $18.83 ( http://t.co/jJbOpsOUZr )
NoSQL
15 Sep 14 12:32:32
RT @StockFluence: Beazer Homes USA Inc.: 75 (-2.6%) http://t.co/ENukeB06Jz $BZH #BeazerHomes #Sentiment #Stock #Analysis #BigData
StockFluence.com
15 Sep 14 12:01:52
Beazer Homes USA Inc.: 75 (-2.6%) http://t.co/ENukeB06Jz $BZH #BeazerHomes #Sentiment #Stock #Analysis #BigData
Market Int Center
15 Sep 14 08:49:34
Potential Beazer Homes USA $BZH Trade Has 9.71% Downside Protection ( http://t.co/jMxIbUCU3Q )
TickerChirp
14 Sep 14 04:14:05
Top Tweets Pertaining to $BZH on 09/14/2014 http://t.co/UIvaC4gHle
Grant Dossetto
13 Sep 14 09:00:44
Sensitive housing markets are seeing double digit price declines amid rising inventory again. $bzh $tol $phm http://t.co/fU3ULVgUSt
Market Int Center
12 Sep 14 07:53:55
Potential Beazer Homes USA $BZH Trade Has 12.49% Downside Protection ( http://t.co/c75QzQudR9 )
				
				
By  +Follow August 1, 2013 8:16AM
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