Beazer Homes

(BZH) - Get Beazer Homes USA, Inc. Report

reported huge growth in fourth-quarter and full-year earnings, blowing past analyst expectations. The homebuilder also said its growing backlog will keep the revenue and earnings machine rolling through 2004.

Beazer also declared its first dividend, saying it will pay out 10 cents a quarter.

For the fourth quarter, Atlanta-based Beazer earned $57 million, or $4.18 a share, on its first $1 billion revenue quarter. Earnings and revenue rose by 41% and 15%, respectively, vs. the year-ago period. Analysts polled by First Call had expected the company to $3.90 a share on revenue of about $980 million.

For the full year 2003, the company earned $173 million, or $12.78 a share, on revenue of $3.2 billion, up 41% and 20% respectively vs. 2002. Analysts had expected the company to earn $12.48 a share on revenue of $3 billion.

The company also offered 2004 guidance that far exceeds current analysts' expectations, citing its growing backlog, though the company did not address the risk that a rise in interest rates could slow its business. The company says its current backlog (orders placed, but not yet fulfilled and booked as revenue) grew 27% vs. the prior year and now stands at $1.6 billion on over 7,000 homes.

Chief Executive Ian J. McCarthy said, "This sizable year-end backlog increase provides excellent visibility for another strong performance during fiscal 2004," and added that he expects earnings growth of 10% to 15%, or $14 to $14.75 a share, exceeding current expectations of $13.76 per share.

In premarket trading, the stock is up $1, or 1%, to $102.31. Shares are up 63% for the year.

The company also touted its debt management, noting solid increases in its interest coverage ratio and a corresponding decrease in its debt-to-capitalization ratio. Feeling confident about its growth, Beazer will also launch a major marketing campaign to create what it describes as a unified national brand, most interestingly to get "repeat customers." Because repeat customers for new homes usually come from families trading up to higher-priced homes as they grow older and home prices increase, this move implies the company believes home prices will continue to rise and that interest rates will remain low.

Notwithstanding the company's confidence, investors continue to value the company, and the entire homebuilding industry, at levels that reflect a belief that homebuilding is a cyclical business. Beazer trades at a price-to-earnings ratio of 7 times its expected 2004 earnings, vs. 8 for

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