Value
8.8/10data confidence 60%| Component | Sub-score |
|---|---|
| P/S | 9.8 |
| EV/EBITDA | 7.0 |
| p ocf | 9.7 |
- ▸P/OCF: 4.7x (FFO proxy — REITs gated off P/E)
- ▸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 score5.4/10
ConfidenceHIGH
MacroRISK_OFF
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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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. | →Stable |
| 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.
→StableValuation 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.
→StableQuality 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.
→StableKey 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%.
→StableUpside 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
4.8/10data confidence 100%| Component | Sub-score |
|---|---|
| ROE | 3.2 |
| ROA | 2.8 |
| Gross margin | 0.3 |
| Op margin | 4.5 |
| Net margin | 4.9 |
| Current ratio | 7.2 |
| FCF quality | 6.5 |
| Moat | 4.5 |
| Piotroski F | 8.9 |
- ▸No competitive moat
- ▸Strong Piotroski F-Score: 8/9
Growth
3.7/10data confidence 67%| Component | Sub-score |
|---|---|
| Rev growth | 3.6 |
| EPS growth | 3.7 |
Momentum
5.0/10data confidence 100%| Component | Sub-score |
|---|---|
| RSI | 4.5 |
| MACD | 9.1 |
| OBV | 1.0 |
| MA position | 5.2 |
| Volume | 5.2 |
- ▸Volume distribution (falling OBV)
- ▸Below 200-MA but MA still rising (+0.1%/30d) — pullback in uptrend, not confirmed weakness
Sentiment
5.5/10data confidence 100%| Component | Sub-score |
|---|---|
| LLM sentiment | 3.0 |
| Analyst rating | 5.0 |
| Price target | 8.7 |
- ▸LLM news sentiment: -0.40 (n=3)
- ▸Analyst upside: 31%
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
5.5/10data confidence 80%| Component | Sub-score |
|---|---|
| value rank | 5.8 |
| quality rank | 6.3 |
| growth rank | 2.5 |
Technical
4.7/10data confidence 100%| Component | Sub-score |
|---|---|
| bollinger | 3.6 |
| support resistance | 4.4 |
| 52w position | 6.2 |
Risk (lower is worse)
4.6/10data confidence 100%| Component | Sub-score |
|---|---|
| short interest | 7.4 |
| days to cover | 5.5 |
| volatility | 5.1 |
| put call | 0.0 |
| implied vol | 0.6 |
| beta | 5.4 |
| debt equity | 8.3 |
- ▸Elevated put/call: 2.40
- ▸High IV: 77%
Catalyst
2.6/10data confidence 100%| Component | Sub-score |
|---|---|
| erm | 3.5 |
| earnings history | 0.0 |
| surprise avg | 0.1 |
| news activity | 7.0 |
How the verdict was assembled
Engine trigger
Multiple concerning factors. Consider reducing position.
Engine technical detail
verdict_path:
L4:PATH_F_SELLPassed (7)
- MOMENTUM:5.0>=4.5
- ASYMMETRY:1.9>=1.5
- INSIDER:OK
- 8K:CLEAN
- EARNINGS_PROXIMITY:NO_DATE
- SEMI_CYCLE_PEAK:CLEAR
- MATERIALS_CYCLE_PEAK:CLEAR
Failed (0)
none
Warning (1)
- MOMENTUM:5.0<5.5 (soft — BUY_NOW allowed but watch)
Reward-to-Risk
1.94
Upside
+11.5%
Downside
5.9%
Sizing output
AVOID
SetupRange Bound — RSI 50 mid-range, Bollinger mid-band
EdgeSector Rotation — Real Estate sector out of favor, value=8.8
SuitabilityAggressive — Beta 1.40>1.3, MCap $1.3B<$5B
Investment implication
The F-path SELL output reflects an overall score of 3.7 below the 5.6 soft trigger — multiple weakening dimensions accumulated rather than a single hard-floor breach. The strongest dimension ( Value at 8.8) was not enough to lift the adjusted overall above the threshold. Current asymmetry R:R is 1.94 — supplementary context, not the trigger for this path.
The strongest dimensions are Value at 8.8, Insider at 6.1, and Sentiment at 5.5; the weakest are Catalyst at 2.6, Growth at 3.7, and Risk (lower is worse) at 4.6. The V9 engine cleared all gates with 1 warning, producing an asymmetric reward-to-risk of 1.94 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.