Forestar Group Inc. (NYSE:FOR), might not be a large cap stock, but it saw a decent share price growth of 12% on the NYSE over the last few months. While good news for shareholders, the company has traded much higher in the past year. With many analysts covering the stock, we may expect any price-sensitive announcements have already been factored into the stock's share price. However, could the stock still be trading at a relatively cheap price? Let's examine Forestar Group's valuation and outlook in more detail to determine if there's still a bargain opportunity.
What Is Forestar Group Worth?
Great news for investors – Forestar Group is still trading at a fairly cheap price according to our price multiple model, where we compare the company's price-to-earnings ratio to the industry average. We've used the price-to-earnings ratio in this instance because there's not enough visibility to forecast its cash flows. The stock's ratio of 8.27x is currently well-below the industry average of 27.72x, meaning that it is trading at a cheaper price relative to its peers. However, given that Forestar Group's share is fairly volatile (i.e. its price movements are magnified relative to the rest of the market) this could mean the price can sink lower, giving us another chance to buy in the future. This is based on its high beta, which is a good indicator for share price volatility.
What does the future of Forestar Group look like?
Future outlook is an important aspect when you're looking at buying a stock, especially if you are an investor looking for growth in your portfolio. Buying a great company with a robust outlook at a cheap price is always a good investment, so let's also take a look at the company's future expectations. Though in the case of Forestar Group, it is expected to deliver a relatively unexciting earnings growth of 2.2%, which doesn't help build up its investment thesis. Growth doesn't appear to be a main reason for a buy decision for Forestar Group, at least in the near term.
What This Means For You
Are you a shareholder? Even though growth is relatively muted, since FOR is currently trading below the industry PE ratio, it may be a great time to increase your holdings in the stock. However, there are also other factors such as financial health to consider, which could explain the current price multiple.
Are you a potential investor? If you've been keeping an eye on FOR for a while, now might be the time to enter the stock. Its future profit outlook isn't fully reflected in the current share price yet, which means it's not too late to buy FOR. But before you make any investment decisions, consider other factors such as the strength of its balance sheet, in order to make a well-informed investment decision.
It can be quite valuable to consider what analysts expect for Forestar Group from their most recent forecasts. Luckily, you can check out what analysts are forecasting by clicking here.
If you are no longer interested in Forestar Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
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.
