Beazer Homes USA, Inc. (BZH Quick QuoteBZH - Free Report) is still seeing strong demand for new homes as it heads into fiscal 2022. This Zacks Rank #1 (Strong Buy) is dirt cheap with a single digit P/E.

Beazer Homes is headquartered in Atlanta and builds new homes in most of the popular states people are flocking to such as Arizona, California, Delaware, Florida, Georgia, Indiana, Maryland, Nevada, North Carolina, South Carolina, Tennessee, Texas and Virginia.

Another Big Beat in Fiscal Q4

On Nov 10, Beazer reported its fiscal fourth quarter 2021 results and blew by the Zacks Consensus by 92%. Earnings were $1.57 versus the consensus of $0.82.

It was the 7th earnings beat in a row and the 6th huge earnings beat in a row.

The Street has significantly underestimated the earnings power of the home builders since the start of the pandemic.

Revenue fell 13.2% to $589.1 million due to a 19% decrease in home closings, partially offset by a 7.1% increase in average selling price to $418,700.

Adjusted gross margin, a key real estate metric, rose 150 basis points to 23.2%, driven by price increases and lower sales incentives.

What's Going on with New Orders?

A big number which stands out in Q4 is that net new orders fell 46.8% to 1,069. But that was due to a 21.6% decrease in the average community count to 119 and a 32.1 decrease in sales pace to 3 order per community from 4.4 per community last year.

The 4.4 orders per community from Q4 2020 was the highest fourth quarter level in more than a decade.

Like many of the home builders, Beazer took actions to moderate sales in the quarter. They literally were actively trying to slow it, due to the ongoing supply chain and labor pressures.

Why put a home under contract, if you can't build it for months?

Beazer's cancellation rate in the quarter was 11.7%, down 50 basis points from the previous year.

Can this Bull Market in Housing Continue Next Year?

Beazer is bullish going into fiscal 2022 even with the strong year it just delivered.

It's positioning itself for the future as its controlled lots for fiscal 2021 rose 23.3% to 21,987 from 17,830 in the prior year. Excluding land held for future development and land held for sale lots, active controlled lots rose 26.7% to 21,422.

"The new home market continues to be characterized by strong demand and limited supply, supported by growth in both employment and household income," said Beazer's CEO Allan P. Merrill.

"While affordability and supply chain challenges are expected to persist, we believe our strong backlog and operational momentum will allow us to generate earnings per share above $5.00. We also expect further growth in our active lot position and to achieve our multi-year goal of reducing total debt below $1 billion," he added.

Analysts Raise Beazer's F2022 Earnings Estimates

After another solid quarter from Beazer, and Beazer's bright outlook, the analysts raised their earnings estimates for fiscal 2022.

2 estimates were raised for fiscal 2022 since Beazer reported earnings, pushing the Zacks Consensus up to $4.30 from $3.48.

This is still well under the company's guidance of "above $5.00" that it mentioned in the press release.

The Street is reluctant to embrace the idea that housing could be in a multi-year bull market, which will extend well beyond the end of the pandemic.

But here is what its earnings outlook looks like going forward.

Image Source: Zacks Investment Research

Beazer is Still Dirt Cheap

Beazer shares have rallied nearly 42% year-to-date but are off their 2021 5-year highs.

Over the last 3 months, they haven't done much of anything on fears of "peak earnings" until the earnings report sent shares soaring 15%.

Image Source: Zacks Investment Research

Beazer is still dirt cheap, with a forward P/E of just 4.98. Yes, it's about 5x earnings.

How much cheaper can Beazer get?

For investors looking for a way to play the hot housing market, Beazer is a stock to keep on your shortlist.