Forestar Group Inc (NYSE:FOR) Reports Mixed Q1 2026 Results with Revenue Beat and EPS Miss

Forestar Group Inc (NYSE:FOR) reported its fiscal first-quarter 2026 results, delivering a mixed financial performance that saw revenue exceed analyst expectations while earnings per share fell short. The national residential lot developer’s earnings release, coupled with its maintained full-year outlook, appears to have been met with a cautiously positive initial market reaction.

Earnings and Revenue Versus Estimates

The company’s top-line results for the quarter ended December 31, 2025, came in stronger than anticipated. Forestar reported consolidated revenues of $273.0 million, a 9% increase over the prior year period. This figure surpassed the analyst consensus estimate of approximately $263.6 million.

However, profitability metrics told a different story. Net income for the quarter decreased 7% year-over-year to $15.4 million. This resulted in diluted earnings per share (EPS) of $0.30, which missed the analyst estimate of $0.32 per share.

The divergence between revenue growth and net income decline highlights operational pressures. Key factors from the quarter include:

• A 17% decrease in the number of lots sold (1,944 vs. 2,333 in Q1 2025).
• A significant increase in the average sales price per lot to $121,000, up from $105,500 a year ago.
• Higher selling, general, and administrative expenses, which rose to $36.5 million from $36.0 million.

Market Reaction and Outlook

In pre-market trading following the earnings release, Forestar’s stock showed modest positive movement. This initial reaction suggests investors may be focusing on the revenue beat and the company’s reaffirmed guidance rather than the EPS miss.

Chairman Donald J. Tomnitz reiterated the company’s full-year outlook, stating, “In fiscal 2026, we still expect to deliver between 14,000 and 15,000 lots, generating $1.6 billion to $1.7 billion of revenue.” This forecast aligns closely with the current analyst consensus estimate for full-year 2026 sales of approximately $1.67 billion, providing a degree of certainty for the remainder of the fiscal year.

Key Takeaways from the Quarterly Report

Beyond the headline earnings figures, the press release underscored several pillars of Forestar’s strategic position and financial health:

• Strong Lot Pipeline and Future Revenue: The company owns or controls 101,000 lots. Crucially, 24,100 owned lots are already under contract for sale, representing approximately $2.2 billion in future revenue.
• Strategic Relationship with D.R. Horton: As a majority-owned subsidiary of the nation’s largest homebuilder, Forestar sold the vast majority of its lots this quarter to D.R. Horton. An additional 18,100 owned lots are subject to a right of first offer for the homebuilding giant.
• Robust Balance Sheet: Forestar maintains a conservative capital structure, ending the quarter with total liquidity of $819.3 million. Its net debt to total capital ratio stood at 24.6%.
• Operational Metrics: Book value per share increased 10% year-over-year to $35.10, and the return on equity for the trailing twelve months was 9.8%.

Looking Ahead

The company’s performance reflects the ongoing challenges in the housing market, including affordability constraints and cautious consumer sentiment referenced by management. The ability to grow revenue through higher average prices, despite selling fewer lots, demonstrates pricing power and a focus on margin. The substantial backlog of contracted revenue provides a visible runway, while the strong balance sheet offers flexibility to navigate market cycles.

For a detailed breakdown of future quarterly estimates and historical earnings performance, you can review the full earnings and estimates data for Forestar Group Inc (FOR).

Disclaimer: This article is for informational purposes only and does not constitute investment advice, financial analysis, or a recommendation to buy or sell any security. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.