Beazer Homes USA Inc.BZH

Stock Research and Analysis

by Morningstar Analysts

Beazer Homes has had a very tough past couple of years, as investigations into wrongdoing along with a financial restatement have compounded the deleterious effects of an imploding real estate market. Although some issues have been mostly put to bed, Read more

Bulls Say

Beazer is now firmly in cash-flow mode. In 2008, the company enjoyed more than $300 million in operating cash flow, and we expect a few hundred million dollars more this year.

Beazer has done a good job of lowering its lot position. At less than 40,000 owned and controlled lots, the company's land position is about 60% lower than in the first quarter of 2006. About 70% of the lots are owned.

More than half of Beazer's joint-venture portfolio's $524 million in total debt (most of which is nonrecourse to Beazer) is connected to one venture where Beazer is only a 2.58% partner. At the end of fiscal 2008, Beazer's exposure to maintenance guarantees was only $5.8 million, and its exposure to repayment guarantees was $39.2 million.

Beazer has no long-term debt due until 2011. Read more

Bears Say

Beazer's operating data paint a picture of a business in rapid decline. Orders, closings, and backlog are significantly off their highs, with the first two both down almost 40% year over year and the last down more than 80% from peak levels. Read more

Strategy

Like all big builders, Beazer attempts to achieve regional economies of scale by clustering its construction efforts to gain more bargaining power with construction suppliers, and to reduce risk by maintaining Read more

Management

President and CEO Ian McCarthy has been a board member since Beazer was spun out of Hanson PLC in 1994. Brian Beazer is the nonexecutive chairman. Allan Merrill became CFO in mid-2007, replacing James O'Leary, who left to take the CEO position at Kaydon Read more

Profile

Beazer Homes is currently the eighth-largest homebuilder in the United States, based upon closings through September 2008. It has operations across the nation, with most Read more

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