Beazer Homes USA

Beazer Homes USA Inc earns a 4-star quantitative star rating, reflecting our opinion that this share class offers a somewhat attractive opportunity for investors. The stock currently trades at a 41% discount to our quantitative fair value estimate of $56.21 per share; however, caution is warranted due to this estimate's high uncertainty rating.

The firm's valuation metrics increase our fair value estimate. A company's valuation metrics provide insights into the market's expectations for its future growth and profitability. Reflecting the firm's valuation is its book value yield of 125.6%, which falls in the top 30% globally. The market price is low relative to the book (accounting) value of the company's equity, which contributes to our view that shares are cheap.

On a different note, the company's lack of profitability is potentially concerning. Companies with low profitability are often less resilient in recessions and are likely to generate weaker future cash flows for shareholders. The firm's earnings yield of -0.2%, for example, ranks in the bottom 30% compared with global peers. The earnings generated by the company relative to its share price is concerning, which, despite our favorable price/fair value ratio, is a negative attribute.

With its quantitative economic moat rating of none, we do not expect this company to materially outearn its cost of capital in the long run. Additionally, the firm's moderate financial health score suggests it is acceptably positioned against adverse economic circumstances.