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Why Beazer Homes USA Stock Just Popped 33%

By Rich Smith – Nov 13, 2018 at 2:01PM

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With a big earnings beat, Beazer's promise to buy back shares is giving the stock an added boost.

What happened

Shares of Beazer Homes USA (BZH 0.76%) are up a good 33% as of 12:30 p.m. EST on Tuesday after the homebuilder reported big beats on both revenue and earnings in its fiscal fourth quarter 2018.

Earlier today Beazer announced it had earned $1.84 per share ($1.15 "adjusted" for one-time items) on total sales of $767.9 million. Wall Street had expected Beazer to earn only $1.01 per share and on sales of only $747.3 million.

Men in hard hats reading blueprints in front of a house

Beazer's beat helps build the case that its stock is a buy. Image source: Getty Images.

So what

Not only did Beazer beat expectations, but its results for the quarter were also objectively good.

Sales were up 14% year over year while earnings surged 79%. This was a nice way to end the year, with growth accelerating from the 10% pace set for 2018 as a whole. Q4 wasn't quite good enough, however, to pull Beazer entirely out of the sea of red ink it's bathed in all year long. Full-year "earnings" at the company still ended up at a $1.41-per-share loss.

Now what

Looking into next year, management noted that in fiscal 2019 it expects to deliver "improved profitability, with a growing community count and a higher average selling price."

Beazer is also hoping to pay down its debt a bit. At $1.2 billion net of cash, Beazer's debt load currently dwarfs its $350 million market cap. But with profits improving, management says it will be "committing capital to both stock and debt repurchases," helping to "generate a double-digit return on assets in the coming year."

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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