BZH Investment Analysis Report & Stock Research, Beazer Homes USA, Inc.

A Word Of Caution

While we stand by our ratings methodology for long term value investors, sometimes smaller companies will be more volatile in terms of revenue, cash earnings, and other fundamental factors. Beazer Homes USA, Inc. (BZH) is such a stock. Because many micro-caps are lightly traded their stock price can fluctuate because of a single large trade. Also, there is less analyst coverage of such micro-caps and therefore less information from which to base our ratings.

While this company may not get as much press because of its small size, please take a moment to look at the RazorWire feed on the right hand side of the report. Any time Beazer Homes USA is mentioned on business television or influential blogs a clip of that will be displayed. This helps to bring you up to speed on any major issues they are facing right now, both positive or negative.

Therefore, (and as always), check additional sources and available information regarding BZH before making an investment decision.

Ockham's Rating/Recommendation Summary

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BZH Revenue

For a long time, value investors have used the current share price relative to sales per share levels as an important valuation tool. We utilize a historical weighted average methodology that treats recent years more importantly in the calculation. When looking at BZH through this framework, we can see that our weighted average historical high and low Price to Sales per share ratios over the last 10 years are 0.44x and 0.14x respectively.

Utilizing this range we can see that BZH’s current Price to Sales per share ratio of 0.16x is significantly below its average levels historically. In fact, with a current price of $4.16, BZH is a full 44% below its average Price to Sales ratio at comparable sales levels. This is a rare occurrence and, when taken in context of the other areas of our analysis, can be a strong positive for our outlook for BZH.

BZH Cash Earnings

When reviewing a company and their prospects for success, it is necessary to analyze their ability to generate positive Cash Earnings. This is a vital component to our analysis, because as a long term investment research firm, there are few factors more closely tied to the valuation of a company as Cash Earnings. In the case of BZH, it appears that either the current estimate for Cash Earnings is negative or BZH is not likely to generate positive Cash Earnings based upon their prior performance in the last several quarters. Remember that Cash Earnings is not the only way to value a company's potential, but in our analysis it is the most important. Thus, for our analysis BZH receives a negative score from a Cash perspective. At Ockham, we are fond of saying "Cash is King," and in this case the company is not generating any. If a company is not able to generate a profit then there is no reason to invest in them. Unless of course you believe in the story, and hope it will eventually lead to a profitable enterprise.

BZH Dividends

A positive Ockham rating does not require a company to pay out an inviting dividend or a dividend at all. However, we believe dividends provide a useful measure of a company's inherent expectations.