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Factors Shaping the Fate of Beazer Homes' (BZH) Q3 Earnings

Beazer Homes USA, Inc. BZH is slated to report third-quarter fiscal 2020 results on Jul 30, after the closing bell.

In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 9.4% and 1.8%, respectively. On a year-over-year basis, earnings and revenues grew 75% and 16.2%, respectively. Higher demand owing to favorable housing dynamics for most part of the first quarter, backed by lower interest rates and improved affordability, had a positive impact on Beazer Homes’ performance in the quarter.

Notably, the company surpassed earnings estimates in four of the trailing five quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has been unchanged at a loss of 9 cents per share over the past 30 days. The said figure indicates a 124.3% decrease from the year-ago figure. The consensus mark for revenues is $427.4 million, suggesting a 11.5% year-over-year decline.

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 expected to have generated lower Homebuilding revenues (accounting for 99.7% of total revenues) in the fiscal third quarter, given disruptions caused by the coronavirus outbreak in the United States. Softness in homebuying demand due to general market uncertainty is expected to have impacted its order flow in the quarter.

Nonetheless, low mortgage rates are likely to have somewhat benefited the company. Also, increased demand for affordable housing is likely to have given a boost to its order growth to some extent. Beazer Homes has been focusing more on virtual platforms to boost customers’ engagement, as coronavirus-led shutdowns and stay-at-home orders have impacted the industry.

Overall, the Zacks Consensus Estimate for Homebuilding revenues of $427 million suggests a 12.5% sequential decrease. For the quarter to be reported, the consensus mark for the number of homes closed is 1,116, which points to a 12.6% sequential decline.

Other Projections

The Zacks Consensus Estimate for fiscal third-quarter 2020 new home orders is pegged at 1,081 units, pointing to a 34.9% sequential decline. The same for backlog is 2,196 units, implying a 1.6% decline from the last reported quarter.

What the Zacks Model Says

Our proven model does not conclusively predict 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. This is not the case here as you will see below.

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

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

Stocks Worth a Look

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.

TopBuild Corp. BLD has an Earnings ESP of +29.11% and holds a Zacks Rank #1.

Foundation Building Materials, Inc. FBM has an Earnings ESP of +28.57% and carries a Zacks Rank #3.

KBR, Inc. KBR has an Earnings ESP of +11.11% and carries a Zacks Rank #3.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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