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NEW YORK (TheStreet) -- Forestar Group(FOR) - Get Report has been downgraded by TheStreet Ratings from Buy to Hold with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate FORESTAR GROUP INC (FOR) a HOLD. The primary factors that have impacted our rating are mixed ? some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its largely solid financial position with reasonable debt levels by most measures, reasonable valuation levels and good cash flow from operations. However, as a counter to these strengths, we also find weaknesses including unimpressive growth in net income, poor profit margins and a generally disappointing performance in the stock itself."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- The current debt-to-equity ratio, 0.58, is low and is below the industry average, implying that there has been successful management of debt levels.
- FOR, with its decline in revenue, underperformed when compared the industry average of 7.1%. Since the same quarter one year prior, revenues fell by 21.6%. Weakness in the company's revenue seems to have hurt the bottom line, decreasing earnings per share.
- The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Real Estate Management & Development industry. The net income has significantly decreased by 55.8% when compared to the same quarter one year ago, falling from $11.83 million to $5.23 million.
- The gross profit margin for FORESTAR GROUP INC is currently lower than what is desirable, coming in at 30.18%. It has decreased from the same quarter the previous year. Along with this, the net profit margin of 8.88% trails that of the industry average.
You can view the full analysis from the report here: