Executive Summary

Strong top- and bottom-line beat: Q4 revenue of $670.5M and diluted EPS of $1.70 versus S&P Global consensus of ~$556.6M and ~$1.26, respectively; pre-tax margin 16.9% despite a year-ago tough compare on gross margin; beat aided by $103.4M in “tract sales and other,” including the first multifamily site sale . Consensus values from S&P Global Market Intelligence.*
FY25 revenue came in at $1.662B, exceeding the high end of maintained guidance ($1.50–$1.55B), even as FY25 lots delivered (14,240) finished slightly below the Q3-updated guidance range (14,500–15,000), reflecting mix and non-lot revenues in Q4 .
Initial FY26 outlook: 14,000–15,000 lots and $1.6–$1.7B of revenue; management expects 1Q26 to be the lowest delivery quarter and a back-half-weighted year, consistent with FY25 cadence .
Balance sheet/LIQ the differentiator: liquidity $968.1M, net debt-to-capital 19.3%, redemption of remaining $70.6M 2026 notes; no senior note maturities until FY28—positioning FOR to take share as project-level financing remains tight for peers .

What Went Well and What Went Wrong

What Went Well

Revenue/EPS beat with expanded ASP: Q4 revenue up 22% YoY to $670.5M; EPS $1.70; ASP per lot rose to $115.7K (vs $97.3K a year ago). CFO: “gross profit margin this quarter was 22.3%, down 160 bps YoY… prior year benefited from an unusually high margin project,” yet pre-tax margin still 16.9% .
Strategic/financial positioning: Liquidity $968.1M; net debt-to-capital 19.3%; redeemed 3.85% 2026 notes; “Our capital structure provides… operational flexibility… positions us to take advantage of attractive opportunities” .
Market-share and platform build-out: CEO highlighted entry into 6–7 new markets, >10% community count increase, and a 92% five-year increase in book value per share; platform and DHI relationship underpin a goal of 1 in 3 DHI homes on FOR lots .

What Went Wrong

Lots delivered missed updated guidance: FY25 lots delivered were 14,240, finishing below the Q3-updated 14,500–15,000 range, even as revenue exceeded guidance, reflecting mix/tract sales contribution .
Gross margin pressure: Q4 gross margin 22.3%, down 160 bps YoY due to a tough comparison from a high-margin project in the year-ago period .
Macro/market pockets remain choppy: Management flagged “pressure in some markets in Texas” and “a little bit more pressure in parts of Florida,” though affordable price points still see good absorptions .

Financial Results

Headline P&L and Operating KPIs

Metric	Q4 2024	Q2 2025	Q3 2025	Q4 2025
Revenue ($M)	551.4	351.0	390.5	670.5
Diluted EPS ($)	1.60	0.62	0.65	1.70
Pre-tax income ($M)	108.5	40.7	43.6	113.1
Pre-tax profit margin (%)	19.7% (calc. from 108.5/551.4)	11.6% (calc. from 40.7/351.0)	11.2% (calc. from 43.6/390.5)	16.9%
Net income ($M)	81.6	31.6	32.9	87.0
Lots sold (units)	5,374	3,411	3,605	4,891
Avg sales price per lot ($)	97,300	101,700	106,600	115,700
Gross profit margin (%)	—	—	—	22.3%

Notes: Margins marked “calc.” are computed from cited revenue and pre-tax income.

Q4 2025 vs. S&P Global Consensus

Metric	Consensus	Actual
Revenue ($M)	556.6*	670.5
Diluted EPS ($)	1.26*	1.70
# of Estimates	Rev: 4; EPS: 4	—

Values from S&P Global Market Intelligence. Asterisks (*) denote values retrieved from S&P Global.

Revenue Mix (Q4 2025 vs Q4 2024)

Revenue Component ($M)	Q4 2024	Q4 2025
Residential lot sales – Development projects	496.4	546.4
Residential lot sales – Lot banking projects	26.8	19.4
Decrease in contract liabilities	0.3	1.3
Subtotal (before deferred)	523.5	567.1
Deferred development projects	4.5	—
Residential lot sales subtotal (after deferred)	528.0	567.1
Tract sales and other	23.4	103.4
Total revenues	551.4	670.5

Balance Sheet/Liquidity Snapshots

Metric	Q2 2025 (3/31)	Q3 2025 (6/30)	Q4 2025 (9/30)
Cash & cash equivalents ($M)	174.3	189.2	379.2
Debt ($M)	872.5	872.8	802.7
Liquidity ($M)	792.0	792.0	968.1
Net debt / total capital (%)	29.8%	28.9%	19.3%
Book value per share ($)	32.36	33.04	34.78

Lot Position & Contracts

KPI	Q2 2025 (3/31)	Q3 2025 (6/30)	Q4 2025 (9/30)
Owned & controlled lots (000s)	105.9	102.3	99.8
Owned lots under contract (000s)	25.4	25.7	23.8
ROFO lots to D.R. Horton (000s)	19.2	18.5	17.6
Fully developed owned lots (000s)	9.5	10.0	8.9
Contracted future revenue ($B)	~2.3	~2.3	~2.1

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance/Actual	Change
Lots delivered	FY2025	16,000–16,500 (initial, later cut)	14,240 actual	Lowered (Q2 to 15.0–15.5k; Q3 to 14.5–15.0k); actual below updated range
Revenue	FY2025	$1.50–$1.55B (maintained in Q3)	$1.662B actual	Exceeded high end
Lots delivered	FY2026	—	14,000–15,000	New
Revenue	FY2026	—	$1.6–$1.7B	New
Land/Dev Investment	FY2026	—	~$1.4B	New
1Q deliveries cadence	FY2026	—	1Q26 expected lowest; back-half weighted	New

Earnings Call Themes & Trends

Topic	Previous Mentions (Q2 2025, Q3 2025)	Current Period (Q4 2025)	Trend
Affordability/consumer sentiment	Slower-than-expected spring; affordability and declining confidence impacting pace . Continued affordability constraints weigh on demand .	“Affordability constraints and cautious consumer sentiment” persist; rate buydowns help demand at affordable price points .	Persistent headwind; incentives supporting entry-level segment.
D.R. Horton relationship	Emphasis on strategic relationship; $2.3B contracted rev .	15% of DHI starts on FOR lots; target 1-in-3; 17% of FY25 deliveries to other customers (incl. lot bankers) .	Penetration opportunity remains; diversified customer base growing.
Capital structure/liquidity	Issued $500M 2033 notes; tendered $329.4M 2026 notes; LIQ $792M . LIQ $792M; NDtC 28.9% .	LIQ $968.1M; redeemed remaining $70.6M 2026 notes; NDtC 19.3%; no maturities until FY28 .	Improved; meaningful competitive advantage.
Pricing/costs/cycle times	—	—	Lot pricing pushback limited; development costs stable; cycle times improving despite governmental delays .
Geography (TX/FL)	—	—	Pressure in some TX markets; more pressure in parts of FL; affordable price points still absorb .
Cadence	Slower start FY25 .	—	FY26 cadence similar to FY25; 1Q lowest; back-half weighted .
Mix/Tract sales	—	Tract sales $7.5M .	Tract sales and other $103.4M; first multifamily site sale .
Headcount/SG&A	—	—	Headcount +24% in FY25 (mostly recognized from FY24 additions); expect flat to slightly down in FY26; SG&A focus continues .

Management Commentary

“We delivered over 14,200 finished lots in fiscal 2025, and our revenues exceeded the high end of our most recent guidance range.” — Chairman Donald J. Tomnitz .
“Our gross profit margin this quarter was 22.3%, down 160 basis points from a year ago… prior year fourth quarter was positively impacted by lot sales from an unusually high margin project.” — CFO .
“D.R. Horton is our largest and most important customer… with a mutually stated goal of one out of every three homes D.R. Horton sells to be on a lot developed by Forestar.” — CFO .
“We expect to deliver between 14,000 and 15,000 lots [in FY26], generating $1.6 billion to $1.7 billion of revenue… first quarter will be our lowest delivery quarter of the year.” — CEO .

Q&A Highlights

Growth vs. DHI: Management expects FOR deliveries to grow at least in line to slightly above DHI given size and new markets; spring selling season will influence upside .
SG&A/headcount: FY25 average employee count up 24% to support expansion; outlook for flat to slightly down headcount in FY26, implying SG&A leverage opportunity .
Pricing/takedowns: Limited pushback on lot pricing; renegotiated “time and terms” on land rather than land value; project-by-project price management to maximize returns .
Geographic trends: Choppiness in Texas and more pressure in parts of Florida; affordable price points continue to see good absorptions .
Cadence: FY26 expected to mirror FY25 with back-half weighted deliveries; 1Q26 likely lowest .

Estimates Context

Q4 2025 vs. S&P Global consensus: Revenue $670.5M vs ~$556.6M*; EPS $1.70 vs ~$1.26*; both beats. Four estimates for revenue and for EPS in the quarter.*
Values with asterisks (*) retrieved from S&P Global Market Intelligence.
Implications: Revenue beat magnitude (~$114M) reflects large “tract sales and other” line ($103.4M) and higher ASP; estimate models may need to adjust non-lot revenue expectations, ASP, and cadence/back-half weighting .

Key Takeaways for Investors

Quality beat with mix tailwind: Substantial revenue/EPS outperformance driven by elevated “tract sales and other” and rising ASP; margin held resilient despite YoY gross margin headwind .
FY26 set up: Initial guide of 14–15k lots and $1.6–$1.7B revenue with 1Q seasonally light and back-half weighted—model cadence accordingly .
Share gain runway vs. DHI: Only ~15% of DHI starts on FOR lots vs. 1-in-3 long-term aspiration—significant penetration upside if demand holds .
Balance sheet advantage: High liquidity ($968M) and no maturities until FY28 enable opportunistic land/development investment and market share aggregation amid tighter project-level financing for peers .
Watch geography and affordability: TX/FL choppiness and affordability constraints persist, but entry-level focus and rate buydowns support absorption .
FY25 lot shortfall vs. updated guidance but revenue upside: Expect consensus to recalibrate lot vs. non-lot revenue mix, with tract/multifamily transactions adding variability to quarterly prints .
Operating leverage potential: Headcount stable-to-down and SG&A focus suggest leverage if volumes and mix normalize in FY26 .

Asterisks (*) denote values retrieved from S&P Global Market Intelligence. All other figures cited from company filings and transcripts.

Sources:

Q4/FY25 8-K earnings release and financials
Q4 2025 earnings call transcript
Q3 2025 8-K earnings release
Q2 2025 8-K earnings release

Forestar Group Inc. (FOR)·Q4 2025 Earnings Summary