Forestar Group Inc. reported fiscal second‑quarter 2026 results with net income of $32.1 million and earnings per share of $0.63. Revenue rose 7% year‑over‑year to $374.3 million, while the company sold 2,938 residential lots, a decline from the 3,500‑plus lots sold in the prior year quarter. Gross profit margin contracted to 21.4% from 22.6% in the same quarter a year earlier, reflecting a significant increase in land option charges.
Revenue growth was driven by a 15% increase in the average sales price per lot, which offset a 17% decline in lot volume. The company’s first‑quarter 2026 EPS of $0.30 and second‑quarter 2025 EPS of $0.62 illustrate the acceleration in earnings momentum, while the current quarter’s $0.63 EPS matches analyst expectations of $0.63.
The margin contraction is largely attributable to $6.3 million in land option charges in Q2 2026 compared with $900,000 in the prior year quarter. Excluding these charges, the gross margin would have been approximately 22.9%, indicating that core operating profitability remained relatively stable.
Forestar maintained a strong liquidity position with $1.0 billion in total liquidity and a net debt‑to‑capital ratio of 19.2%, underscoring its ability to weather market volatility.
Management reiterated its full‑year revenue guidance of $1.6 billion to $1.7 billion and updated its lot delivery guidance to 14,000 to 14,500 lots, a slight reduction from the previous 14,000 to 15,000 range. The adjustment reflects persistent affordability constraints and cautious consumer sentiment, but the company remains confident in its $2.2 billion backlog and liquidity to support future growth.
Investors focused on margin pressures, reflecting concerns about the impact of land option charges on profitability.
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