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Beazer Homes: 8 Different Insiders Have Purchased Shares This Month

August 09, 2014 | About:
maarnio

maarnio

2 followers

1 The Company

One homebuilder has seen intensive insider buying during the last 30 days. Intensive insider buying can be defined by the following three criteria:

  1. The stock is purchased by three or more insiders within one month.

  2. The stock is sold by no insiders in the month of intensive purchasing.

  3. At least two purchasers increase their holdings by more than 10%.

Beazer Homes USA (BZH) designs, builds, and sells single-family and multi-family homes in the United States.

Shares outstanding

26.4 million

Share price

$16.84

Market cap

$445.0 million

Enterprise value

$1.8 billion

P/S

0.3

Ticker

BZH

chart.ashx.png

1.1 History

  • In 1696 George Beazer established the family trade in England.
  • Beazer Homes moved to the U.S. in 1986.
  • In March 1994 Beazer Homes had its initial public offering.

nimetön.png

(Source: Beazer Homes)

1.2 Business Model

The company’s homes are designed to appeal to homeowners at various price points across various demographic segments and are generally offered for sale in advance of their construction. Beazer Homes’ objective is to provide its customers with homes that incorporate exceptional value and quality while seeking to maximize the company’s return on invested capital over the course of a housing cycle.

2 Management

The CEO Allan Merrill has more than 20 years of industry experience. Allan Merrill has been CEO since January 2011.

Brian Beazer is the Chairman of the company. Mr. Beazer has been in the homebuilding and construction industry worldwide for over 50 years.

2.1 Insider Ownership

Beazer Homes’ directors and executive officers own 3.0% of the company.

Here is a table of Beazer Homes’ insider activity during the last 30 days.

Name

Title

Trade Date

Shares Purchased

Current Ownership

Increase InShares

Elizabeth Acton

Director

Aug 5

1,000

10,560 shares

+10.5%

Stephen Zelnak

Director

Aug 4

10,000

46,017 shares

+27.8%

Laurent Alpert

Director

Aug 4

2,500

20,340 shares

+14.0%

Norma Provencio

Director

Aug 1

3,000

18,240 shares

+19.7%

Allan Merrill

CEO

Aug 1

10,000

179,941 shares

+5.9%

Kenneth Khoury

EVP

Aug 1

4,672

67,390 shares

+7.4%

Robert Salomon

CFO

Aug 1

7,000

53,462 shares

+15.1%

Brian Beazer

Chairman

Aug 1

10,000

63,425 shares

+18.7%

There have been 47,172 shares purchased by insiders during the last 30 days. Six of these eight insiders increased their holdings by more than 10%.

Here is a table of Beazer Homes’ insider activity by calendar month.

Insider buying / shares

Insider selling / shares

August 2014

48,172

0

July 2014

0

0

June 2014

17,000

0

May 2014

0

0

April 2014

0

0

March 2014

0

0

February 2014

0

0

January 2014

0

0

December 2013

0

0

November 2013

0

0

October 2013

0

0

September 2013

0

0

August 2013

0

0

July 2013

0

0

June 2013

0

0

May 2013

0

0

April 2013

0

0

March 2013

0

0

February 2013

0

0

January 2013

0

0

There have been 65,172 shares purchased and there have been zero shares sold by insiders since January 2013.

2.2 Compensation

Here is a table of the management’s compensation during the last three years.

nimetön.png

(Source: Proxy Statement)

The management’s total compensation was highest in 2012.

3 Operating Summary

Here is a table of Beazer Homes’ number of homes closed and average closing prices.

Fiscal Year

Number of Homes Closed (Continuing Operations)

Average Closing Price ($ in thousands)

2004

16,451

232.2

2005

18,109

271.3

2006

18,361

285.7

2007

12,020

277.4

2008

6,370

254.3

2009

4,196

230.8

2010

4,513

221.7

2011

3,249

219.4

2012

4,428

224.9

2013

5,056

253.0

The number of homes closed and the average closing prices have been trending higher since 2011.

4 Financial Summary

4.1 Current Situation

Beazer Homes reported the fiscal 2014 third-quarter, which ended June 30, financial results on July 31 with the following highlights:

Revenue

$354.7 million

Net loss

$12.4 million

Cash

$206.5 million

Debt

$1.5 billion

Backlog

$663.2 million

nimetön.png

(Source: Investor presentation)

The revenue grew 12.8% in the quarter compared to the prior year. Beazer Homes posted net income excluding refinancing charge of $6.6 million.

4.2 Historical Developments

Here is a table of Beazer Homes’ revenue and earnings since 2004.

Fiscal Year

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Revenue ($ in billions)

3.9

5.0

5.4

3.5

1.7

1.0

1.0

0.7

1.0

1.3

Net income / loss ($ in millions)

+235.8

+275.9

+368.8

-411.1

-951.9

-189.4

-34.0

-204.9

-145.3

-33.9

EPS (diluted)

+29.54

+29.35

+42.20

-53.50

-123.45

-24.50

-2.85

-13.84

-7.87

-1.37

(Note: Beazer Homes had an 1-for-5 reverse stock split on October 11, 2012, and a 3-for-1 split on March 22, 2005. The EPS numbers have been adjusted accordingly.)

The revenue has been growing since 2011 and also the net losses have been trending lower since 2011.

5 Shares

Here is a table of Beazer Homes’ number of shares since 2004.

Year

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

Number of shares (basic) (in millions)

8.3

8.1

8.0

7.7

7.7

7.7

12.0

14.8

18.5

24.7

Number of shares (diluted) (millions)

8.5

9.1

8.9

7.7

7.7

7.7

12.0

14.8

18.5

24.7

(Note: Beazer Homes had an 1-for-5 reverse stock split on October 11, 2012, and a 3-for-1 split on March 22, 2005. The number of shares have been adjusted accordingly.)

Beazer Homes’ number of shares (diluted) have grown 191% since 2004.

6 Outlook

Beazer Homes expects its full-year GAAP net income to be above $30 million.

nimetön.png

(Source: Investor presentation)

7 Competition

Beazer Homes’ competitors include KB Home (KBH), Lennar (LEN), and PulteGroup (PHM). Here is a table comparing these companies.

Company

BZH

KBH

LEN

PHM

Market Cap:

442.59M

1.51B

7.47B

6.75B

Employees:

878

1,430

5,741

3,843

Qtrly Rev Growth (yoy):

0.13

0.08

0.28

0.01

Revenue:

1.36B

2.18B

6.70B

5.64B

Gross Margin:

0.19

0.19

0.23

0.23

EBITDA:

70.80M

141.68M

817.54M

632.90M

Operating Margin:

0.04

0.06

0.12

0.11

Net Income:

-14.04M

92.37M

493.79M

2.60B

EPS:

-0.28

0.69

2.23

6.71

P/E:

N/A

23.75

16.38

2.67

PEG (5 yr expected):

18.58

1.89

1.51

2.00

P/S:

0.32

0.68

1.10

1.17

Beazer Homes has the lowest P/S ratio among these four companies.

8 Valuation

Beazer Homes will have a book value above $20 per share after the removal of the valuation allowance on the company’s Deferred Tax Assets.

Allan Merrill commented on the most recent earnings call:

“Finally, once we remove the valuation allowance on our DTA, which we expect to begin doing during fiscal 2015, we’ll have the book value above $20 a share. With our earnings potential it seems illogical to me that we would be the only builder to trade below book value.”

9 Risks

The homebuilding industry is cyclical. A severe downturn in the industry, as recently experienced, could adversely affect Beazer Homes’ business, results of operations and stockholders' equity.

10 Conclusion

There have been eight different insiders buying Beazer Homes and there have not been any insiders selling Beazer Homes this month. The eight insiders purchased their shares at prices ranging from $15.97 to $16.82. I believe Beazer Homes could be a good pick below $16.82 based on the intensive insider buying.

nimetön.png

(Source: Investor presentation)

Disclosure: The author has no positions in any stocks mentioned.

About the author:

maarnio
I have 15 years of investing experience. I have traded stocks, commodities and Forex markets.

Rating: 5.0/5 (1 vote)

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