, like so many others in the housing sector, cut its outlook Thursday, saying it expects fewer closings in the fourth quarter.
For fiscal 2006, Beazer expects earnings of $8 to $8.50 a share, down $1.25 from its old forecast of $9.25 to $9.75. The company will likely close a smaller number of homes in the fourth quarter than it previously projected, as net sales through the two months ended Aug. 31 dropped 49% from last year and cancellations of existing contracts rose to 50% from 26% a year ago.
On average, analysts surveyed by Thomson Financial are looking for a profit of $9.27 a share for the fiscal year.
Compared with prior years, a higher percentage of home closings are being deferred or cancelled, immediately prior to closing in many cases, because of declining buyer sentiment and the inability of buyers to sell their existing homes. Beazer said its revised outlook also takes into account potential charges for getting out of nonstrategic land positions that are under review.
Based on its existing backlog and the current state of demand, Beazer estimates that it will deliver between 12,000 and 13,500 homes in fiscal 2007. The company is reviewing its operating plan for the next fiscal year in light of the continuing deterioration in business conditions.
Beazer is hardly the first homebuilder to reduce its guidance, and just Wednesday,
cut its own forecast.