Value
8.4/10data confidence 40%| Component | Sub-score |
|---|---|
| P/S | 9.8 |
| EV/EBITDA | 7.1 |
- ▸Attractively valued
FOR · Why this verdict
Why Forestar Group (FOR) is rated SELL
Updated
Model-generated analysis — not investment advice. Not a registered investment advisor. Past performance does not guarantee future results. How we score · Editorial policy
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VerdictSELL
Overall score4.6/10
ConfidenceMEDIUM
MacroNEUTRAL
TrendMatrix Research · core thesis
Engine thesis — one sentence
Forestar Group looks cheap on cash flow (price to operating cash flow of 4.7x) with a strong Piotroski F-Score of 8/9, but earnings have been soft, lumpy revenue and bearish options positioning cap conviction ahead of results in five days.
Falsifiable statement — pillar-level invalidators below. Engine-derived; not personalized advice.
Thesis pillars
| Pillar | Expectation | Trend |
|---|---|---|
Price to operating cash flow is 4.7x, which makes the shares attractively valued against a 64% margin of safety. Valuation breakdown | Price to operating cash flow stays below 8x while the stock closes some of the gap to intrinsic value. | ↓Deteriorating |
| CounterLot developers earn lumpy cash flow tied to housing cycles, so a low multiple on peak cash flow can be a value trap; the sector modifier is -1.2. | ||
The Piotroski F-Score is 8/9, signaling improving profitability and balance sheet health, even though the overall quality score is 4.8 and there is no moat. Quality breakdown | Piotroski F-Score stays at 7 or above through the next 12 months. | ↓Deteriorating |
| CounterReturns are thin (ROE component 3.2, operating margin component 4.5), so a high F-Score may reflect checkbox improvements rather than real profitability. | ||
The latest quarter missed ($0.70 versus $0.81 estimate), and two of the prior three were in line, so results have not been beating expectations. Last 4 quarters | EPS beats consensus in at least two of the next four quarters. | ↓Deteriorating |
| CounterThe October 2025 quarter beat strongly ($1.70 versus $1.26), and quarterly revenue swings from $273M to $670M, so single quarters are poor signals. | ||
The put/call ratio is 2.40 and implied volatility is 68%, showing traders buying protection into earnings. Key risks | Put/call ratio normalizes below 1.0 as earnings clear. | ↓Deteriorating |
| CounterHeavy put buying can be hedging by holders of an already-owned position rather than a directional bet, and the price is still above a rising 200-day average slope of +0.3%. | ||
The $28.90 analyst target is 10.8% above the $26.09 price, with downside to the stop of 6.2%. Upside pct | Price reaches the analyst target within 12 months. | ↓Deteriorating |
| CounterThe gap is modest and reward-to-risk of 1.73 leaves little margin for an earnings miss in five days. | ||
Price to operating cash flow is 4.7x, which makes the shares attractively valued against a 64% margin of safety.
↓DeterioratingValuation breakdown
- Expectation
- Price to operating cash flow stays below 8x while the stock closes some of the gap to intrinsic value.
CounterLot developers earn lumpy cash flow tied to housing cycles, so a low multiple on peak cash flow can be a value trap; the sector modifier is -1.2.
The Piotroski F-Score is 8/9, signaling improving profitability and balance sheet health, even though the overall quality score is 4.8 and there is no moat.
↓DeterioratingQuality breakdown
- Expectation
- Piotroski F-Score stays at 7 or above through the next 12 months.
CounterReturns are thin (ROE component 3.2, operating margin component 4.5), so a high F-Score may reflect checkbox improvements rather than real profitability.
The latest quarter missed ($0.70 versus $0.81 estimate), and two of the prior three were in line, so results have not been beating expectations.
↓DeterioratingLast 4 quarters
- Expectation
- EPS beats consensus in at least two of the next four quarters.
CounterThe October 2025 quarter beat strongly ($1.70 versus $1.26), and quarterly revenue swings from $273M to $670M, so single quarters are poor signals.
The put/call ratio is 2.40 and implied volatility is 68%, showing traders buying protection into earnings.
↓DeterioratingKey risks
- Expectation
- Put/call ratio normalizes below 1.0 as earnings clear.
CounterHeavy put buying can be hedging by holders of an already-owned position rather than a directional bet, and the price is still above a rising 200-day average slope of +0.3%.
The $28.90 analyst target is 10.8% above the $26.09 price, with downside to the stop of 6.2%.
↓DeterioratingUpside pct
- Expectation
- Price reaches the analyst target within 12 months.
CounterThe gap is modest and reward-to-risk of 1.73 leaves little margin for an earnings miss in five days.
Per-dimension breakdown
Quality
3.7/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 2.6 |
| ROA | 2.2 |
| Gross margin | 0.0 |
| Op margin | 4.5 |
| Net margin | 4.4 |
| Current ratio | 7.7 |
| Moat | 3.9 |
| Piotroski F | 4.4 |
- ▸No competitive moat
Growth
0.0/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 0.0 |
| EPS growth | 0.0 |
- ▸Declining revenue: -13%
Momentum
1.7/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 1.6 |
| OBV | 1.0 |
| MA position | 1.5 |
| Volume | 0.0 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA, MA slope flat
Sentiment
6.8/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 5.6 |
| Analyst rating | 5.9 |
| Price target | 9.3 |
- ▸Light analyst coverage (2.0) — signal dampened
- ▸Analyst upside: 43%
Insider
6.1/10data confidence 75%| Component | Sub-score |
|---|---|
| materiality | 5.0 |
| holder change | 6.3 |
| notable moves | 7.0 |
- ▸Insider selling (low materiality) — $87,750 (0.007% of mkt cap)
Peer rank
4.9/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.8 |
| quality rank | 6.3 |
| growth rank | 0.0 |
Technical
7.9/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 10.0 |
| support resistance | 8.9 |
| 52w position | 4.9 |
Risk (lower is worse)
4.1/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 5.5 |
| volatility | 2.5 |
| put call | 0.0 |
| implied vol | 0.0 |
| beta | 5.3 |
| debt equity | 8.3 |
- ▸Elevated put/call: 2.40
- ▸High IV: 103%
Catalyst
3.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 5.0 |
| earnings history | 0.0 |
| earnings timing | 5.0 |
| surprise avg | 0.0 |
| news activity | 8.0 |
- ▸Earnings concerns: 0B/2M
How the verdict was assembled
Engine trigger
Quality below minimum threshold.
Engine technical detail
verdict_path:
L1:HARD_BLOCK:QUALITY_FLOORPassed (5)
- ASYMMETRY:2.6>=1.5
- INSIDER:OK
- EARNINGS_PROXIMITY:76d clear
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (2)
- MOMENTUM:1.7<4.5
- DEATH_CROSS:HARD_BLOCK
Warning (1)
- 8K_CSUITE_CHANGE:5.02 (officer departure/appointment)
Reward-to-Risk
2.64
Upside
+21.3%
Downside
8.0%
Sizing output
AVOID
Setup— — No clear chart pattern; technical signals are mixed
EdgeSector Rotation — Real Estate sector out of favor, value=8.4
SuitabilityAggressive — Beta 1.44>1.3, MCap $1.3B<$5B
Investment implication
The SELL_IF_HOLDING verdict reflects the MOMENTUM gate's 1.7<4.5 outcome against Value at 8.4 and asymmetric R:R of 2.64.
The strongest dimensions are Value at 8.4, Technical at 7.9, and Sentiment at 6.8; the weakest are Growth at 0.0, Momentum at 1.7, and Catalyst at 3.6. The V9 engine flagged 2 failed gates with 1 warning, producing an asymmetric reward-to-risk of 2.64 and an engine sizing output of AVOID.
What would invalidate the thesis
Falsifying conditions — when triggered, the corresponding pillar's thesis is invalidated.
- P1Cash Flow Valuation Discount
Trip ifPrice to operating cash flow rises above 8x from the current 4.7x.
- P2Strong Piotroski Fundamentals
Trip ifPiotroski F-Score falls below 6 out of 9 from the current 8.
- P3Soft Recent Earnings
Trip ifEPS surprise stays below 0% for 2 consecutive quarters.
- P4Bearish Options Positioning
Trip ifPut/call ratio stays above 2.0 for 3 consecutive months.
- P5Modest Analyst Upside
Trip ifAnalyst target falls below $26.09, eliminating upside from the current price.