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Beazer Homes (BZH) Up 56% Year to Date: What's Aiding It?

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Beazer Homes USA, Inc. (BZH - Free Report) has exhibited an outstanding run on the bourses in the year-to-date (YTD) period. Shares of the company have jumped 55.8% compared with the Zacks Building Products - Home Builders industry and the Zacks Construction sector’s 38.6% and 32.8% rally, respectively.

BZH has been strengthening its position on the back of solid housing industry prospects and the company’s focus on entry-level, move-up buyers and 55+ buyers. Impressively, its fiscal 2022 prospects also look resilient, despite supply chain disruptions and material, transportation, and labor woes.

The solid uptrend is a testimony to the fact and substantiates its Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Zacks Investment ResearchImage Source: Zacks Investment Research

Let’s delve deeper into the factors supporting its growth trajectory.

Favorable Housing Backdrop: The U.S. housing market is thriving despite risks from new COVID-9 variants and supply-related woes, with home sales rising at a record pace. November new and existing home sales data depicts the true picture of the same.

For fiscal 2021, Beazer Homes reported homebuilding revenue and earnings per share growth of 0.5% and 125.3% year over year, respectively. The results benefited from strong operational execution and continued strength of the housing market. Backlog (in dollars) as of Sep 30, 2021 improved 29% year over year.

Similar to Taylor Morrison, Lennar Corporation (LEN - Free Report) , Toll Brothers, Inc. (TOL - Free Report) , and Meritage Homes Corporation (MTH - Free Report) also gained 14.4%, 23.6%, and 25% YTD, respectively.

Long-Term Balanced Growth Strategy: Beazer Homes primarily banks on a long-term balanced growth strategy, which mainly focuses on the expansion of earnings at a faster rate than revenue growth, supported by a less-leveraged and return-driven capital structure. This strategy provides the company with the flexibility to increase return on capital, reduce leverage, or increase investment in land and other operating assets in response to changing market conditions.

Solid Prospects: The company has solid prospects, as is evident from the Zacks Consensus Estimate for fiscal 2022 earnings of $5.01 per share, which indicates 23.7% year-over-year growth. Particularly, earnings estimates for fiscal first-quarter 2022 indicate 57.5% year-over-year growth. BZH’s earnings surpassed analysts’ expectations in the trailing seven quarters.

This leading homebuilder has an impressive VGM Score of A, supported by a Value and Growth Score of A. Our VGM Score identifies stocks that have the most attractive value, growth and momentum characteristics.

A Brief Overview of the Other Stocks

Lennar, which currently carries a Zacks Rank #2 (Buy), is benefiting from effective cost control and focus on making its homebuilding platform more efficient, which in turn is resulting in higher operating leverage.

Lennar’s earnings for fiscal 2021 and 2022 are expected to rise 78.5% and 7.1% year over year, respectively.

Toll Brothers currently sports a Zacks Rank #1. This Horsham, PA-based luxury homebuilder builds single-family detached and attached home communities; master planned luxury residential resort-style golf communities; and urban low, mid, and high-rise communities, principally on the land it develops and improves. It has been benefiting from the strategy of broadening the product lines, price points and geographies.

Toll Brothers’ earnings for fiscal 2022 are expected to rise 33.2% year over year.

Meritage Homes currently carries a Zacks Rank #2. This Scottsdale, AZ-based prime homebuilder continues to gain from strategic initiatives, focus on entry-level LiVE.NOW homes and solid land position.

Meritage Homes’ earnings are expected to rise 22.2% year over year in 2022.