Beazer Homes USA, Inc. BZH is scheduled to report fourth-quarter fiscal 2024 (ended Sept. 30, 2024) results on Nov. 13, after the closing bell.

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In the last reported quarter, Beazer Homes’ earnings per share (EPS) beat the Zacks Consensus Estimate by 4.8% but revenues missed the same by 0.6%. On a year-over-year basis, EPS of 88 cents declined from the year-ago level of $1.42. Revenues of $595.7 million increased 4% year over year. Homebuilding revenues were $589.6 million, marking a 3.3% increase, driven by a 4.5% rise in home closings to 1,167 units, though offset by a 1.1% decline in average selling price (ASP) to $505,300.

Beazer Homes, one of the country’s largest homebuilders, surpassed the consensus mark in three of the last four quarters. The average surprise over this period is 17.8%.

How Are Estimates Placed for BZH Stock?

The Zacks Consensus Estimate for the fiscal fourth-quarter EPS has remained unchanged at $1.36 over the past 60 days. The estimated figure indicates a 24.4% decline from the year-ago reported figure. Nonetheless, the consensus mark for revenues is $774.3 million, indicating 20% year-over-year growth.

Beazer Homes USA, Inc. Price and EPS Surprise

Beazer Homes USA, Inc. price-eps-surprise | Beazer Homes USA, Inc. Quote

Factors Influencing Beazer Homes’ Q4 Performance

Beazer Homes’ total revenues in the fiscal fourth quarter might have registered growth mainly attributable to higher deliveries. Although elevated mortgage rates continued to weigh on affordability for potential buyers, the company’s proactive strategies in expanding its community count, embracing sustainable building practices, and making calculated financial decisions might have driven growth. The company’s unique positioning with energy-efficient homes, combined with its robust financial health are added positives.

The company expects closings in the fiscal fourth quarter to be around 1,500 homes, marking more than 20% increase compared to the previous year. The ASP is projected to be approximately $520,000, reflecting a modest uptick from the year-ago level of $510,800.

The fiscal fourth-quarter sales pace is expected to align with the fiscal third quarter, leading to approximately 1,100 new orders, slightly up from the prior year.

However, to address the affordability challenges faced by many buyers, Beazer Homes increased sales incentives, which had a direct impact on gross margins. Also, Beazer Homes is focused on selling non-"Zero Energy Ready" spec homes in certain markets. This approach, while helping to clear older inventory, comes at the cost of gross margin as these homes are sold with higher incentives and typically at lower margins than newer energy-efficient homes. Also, inflationary pressures in construction materials and labor are expected to have further compressed operating profitability.

The company expects adjusted gross margin to remain stable at around 20%, similar to the prior quarter, with SG&A expenses anticipated to be about 10% of total revenues, down both sequentially and year over year. This is expected to lead to an adjusted EBITDA exceeding $80 million, contributing to projected EPS of around $1.35.