Investment Thesis
Beazer Homes is experiencing severe operational distress with persistent unprofitability, negative operating cash flow of -$228.8M, and deteriorating performance (net income down 67.5% YoY). The combination of high leverage (1.33x debt/equity), razor-thin 11.1% gross margins, and negative free cash flow of -$242.1M creates material solvency concerns. Absent significant operational restructuring and demand recovery, the company faces refinancing risk.
Strengths
- Maintains meaningful revenue base of $773.3M with modest 1.8% YoY growth indicating some market demand
- Positive stockholders' equity of $1.2B provides balance sheet foundation
- Gross profit of $85.9M demonstrates the company generates some contribution before fixed costs
Risks
- Critical negative operating cash flow of -$228.8M; business is burning cash operationally despite revenue generation
- Structural profitability crisis: operating margin of -6.6%, net margin of -4.3%, and negative ROE/ROA indicate fundamental operational failure
- Elevated leverage (1.33x debt/equity) with $1.6B debt burden unsustainable given negative cash generation and deteriorating earnings
- Gross margin of 11.1% is critically low for homebuilding, signaling severe cost pressures or pricing power collapse
- Rapidly deteriorating trend: net income down 67.5% YoY with negative EPS of -$1.18
Key Metrics to Watch
- Operating Cash Flow - must achieve positive quarterly generation to validate business model sustainability
- Gross Margin trajectory - 11.1% is unsustainable; need evidence of cost management or pricing recovery
- Debt refinancing requirements and covenant compliance - critical given negative cash flow generation
Financial Metrics
Revenue
773.3M
Net Income
-33.5M
EPS (Diluted)
$-1.18
Free Cash Flow
-242.1M
Total Assets
2.8B
Cash
120.4M
Profitability Ratios
Gross Margin
11.1%
Operating Margin
-6.6%
Net Margin
-4.3%
ROE
-2.9%
ROA
-1.2%
FCF Margin
-31.3%
Balance Sheet & Liquidity
Current Ratio
N/A
Quick Ratio
N/A
Debt/Equity
1.33x
Debt/Assets
57.5%
Interest Coverage
N/A
Long-term Debt
1.6B
Disclaimer: This analysis is generated by AI based on publicly available SEC EDGAR filings.
It does not include stock price data and should not be considered financial advice.
All fundamental data is sourced from SEC public domain filings.
Always conduct your own research before making investment decisions.
Data Source: SEC EDGAR |
Analysis Date: 2026-05-06T17:10:11.644137 |
Data as of: 2026-03-31 |
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