When top-10 homebuilder Beazer Homes USA
Bigger, because analysts think this company has posted yet another quarter of banner profits. Smaller, because the company announced three months ago a buyback plan that will result in fewer shares than previously. The net result of this combination -- more profits divided amongst fewer shares.
According to the "experts," Beazer probably grew its sales 15% in fiscal Q1 2006, compared with fiscal Q1 2005. On the strength of that revenue, Wall Street believes that Beazer managed to earn $1.96 per share -- 25% better than last year.
Impressed yet? Feeling the anticipation? Then get ready for even better news. On Nov. 18, Beazer announced that despite all you've been hearing about the death of the housing market on CNBC and all you've been reading along the same lines in the pages of The Wall Street Journal, the housing boom isn't over -- and Beazer's shares are cheap. Putting its money where its mouth is, Beazer announced that it intends to buy back 10 million shares of its common stock, which makes for a fivefold increase over the mere 2 million shares it was authorized to repurchase as recently as September 2005. According to the press release, Beazer had already made good on 500,000 shares' worth of its authorization, and it expects to purchase the remaining 9.5 million shares authorized over the next 36 (now 33) months.
Sound good? Ready to sign up and buy a few shares? You're in luck, because it just so happens that Beazer execs have quite a few shares that they're ready to sell you. According to Yahoo! Finance, Beazer insiders have unloaded 12.2% worth of their already less-than-substantial stake (less than 3%) in the company over the past six months.
Now, scary as that sounds, it may not be quite as bad a sign as it seems at first glance. As a general rule, what should frighten you is when insiders continue selling as their company's stock price drops. Beazer, though, has seen its shares continue to charge ever upward over the past half-year, rising roughly 33% in six months -- this during a time when rivals such as Lennar
Strangely, each of the above four competitors has managed to beat analyst estimates in each of the past four quarters -- while Beazer is only three for four. Tomorrow, we'll see whether Beazer can try to even the score and keep its shares on their upward march.
Fool contributor Rich Smith has no position in any of the companies mentioned in this article.