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Beazer Homes (BZH) to Post Q3 Earnings: What's in the Offing?

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Beazer Homes USA, Inc. (BZH - Free Report) is slated to report third-quarter fiscal 2021 results on Jul 29, after market close.

In the last reported quarter, its earnings topped the Zacks Consensus Estimate by 55.8% and increased 131.4% year over year. The upside was driven by higher revenues, solid homebuilding gross margin and improved SG&A leverage. The company's earnings topped analysts’ expectations in each of the trailing four quarters.

Total revenues also increased 12.4% year over year, backed by 12.2% rise in homebuilding revenues and 73.2% increase in Land sales and other.

Trend in Estimate Revision

For the quarter to be reported, the Zacks Consensus Estimate for earnings has been stable at 90 cents per share in the past 60 days. This indicates a solid increase of 58.8% from 63 cents recorded a year ago. The consensus estimate for revenues is pegged at $612.6 million, suggesting a rise of 14.9% from the prior-year quarter.

Beazer Homes USA, Inc. Price and EPS Surprise

 

Beazer Homes USA, Inc. Price and EPS Surprise

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

 

Factors to Note

Beazer Homes is likely to have generated higher revenues and earnings in fiscal third quarter owing to solid demand trends, which is a result of resilient housing market fundamentals. The combination of favorable demographic forces, low inventory levels, historically low mortgage rates and years of under-building has taken the nation's need for new housing supply to new heights. However, the imbalance in demand and supply of homes, higher material costs and labor constraints have prompted builders to increase prices.

During fiscal second-quarter earnings call, the company noted that it expects fiscal third quarter closings to be up in the high single digits. Average selling is likely to be above $400,000. Gross margin is anticipated to be up 100 basis points (bps). SG&A — as a percentage of total revenues — is projected to decline 20 bps.

However, the current production environment is likely to have negatively impacted fiscal third-quarter sales and closings as the company deliberately slowed home sales. The company anticipates new homeowners to be down 10-20% in fiscal third quarter.

What Our Model Indicates

Our proven model does not conclusively predicts an earnings beat for Beazer Homes this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. Unfortunately, this is not the case here.

Earnings ESP: The Earnings ESP for the company is 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: Beazer Homes currently has a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

Stocks With Favorable Combination

Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.

ChampionX Corporation (CHX - Free Report) has an Earnings ESP of +10% and a Zacks Rank #3.

United Rentals, Inc. (URI - Free Report) has an Earnings ESP of +4.89% and a Zacks Rank #3.

Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +10.32% and a Zacks Rank of 2 at present.