Forestar Group Inc. (FOR): BCG Matrix [Dec-2025 Updated]

You're looking for a clear map of Forestar Group's strategic position, so here is the BCG Matrix breakdown of their lot development business as of late 2025. Honestly, the picture is sharp: the core business, fueled by that massive 85-90% guaranteed volume from D.R. Horton, is a rock-solid Cash Cow delivering $1.66 billion in revenue, while the national platform push into high-growth Sunbelt markets is clearly the Star, backed by $2.1 billion in contracted future sales. Still, we need to watch the Question Marks, like that 10-15% diversification effort, and keep an eye on trimming those legacy Dogs. Dive in below to see exactly where Forestar Group Inc. (FOR) needs to invest, hold, or divest right now.

Background of Forestar Group Inc. (FOR)

Forestar Group Inc. (FOR) is a national residential lot development company, headquartered in Arlington, Texas. You should know that Forestar is a majority-owned subsidiary of D.R. Horton, which is the largest homebuilder by volume in the United States. The core business for Forestar Group Inc. involves acquiring entitled real estate and developing it into finished residential lots that are then sold to homebuilders.

As of the end of its fiscal year on September 30, 2025, Forestar Group Inc. reported some significant figures. Consolidated revenues for fiscal 2025 increased by 10% year-over-year, reaching $1.7 billion, or more precisely, $1,662.4 million. The company delivered a total of 14,240 residential lots during that same fiscal year.

However, the bottom line showed some pressure; net income for the full fiscal year 2025 decreased by 17% compared to fiscal 2024, totaling $167.9 million. This translated to a diluted earnings per share (EPS) of $3.29 for the fiscal year ended September 30, 2025. To give you a sense of recent performance, in the fourth quarter of fiscal 2025 alone, the company sold 4,891 lots, but the average sales price per lot jumped significantly by 24% to $115,700, helping push quarterly revenue up 22% to $670.5 million.

Geographically, Forestar Group Inc. maintains a broad footprint, which helps mitigate local economic risks. The company operates in 64 markets across 23 states. At the close of fiscal 2025, the company's total lot position-both owned and controlled through purchase contracts-stood at 99,800 lots. Importantly for future visibility, 23,800 of the owned lots were under contract to be sold, representing approximately $2.1 billion in expected future revenue.

Financially, Forestar Group Inc. ended the period with a strong liquidity position, reporting total liquidity of $968.1 million. This liquidity was composed of $379.2 million in unrestricted cash and $588.9 million in available borrowing capacity on its credit facility.

Forestar Group Inc. (FOR) - BCG Matrix: Stars

You're looking at the engine of Forestar Group Inc.'s future growth, the segment that demands heavy investment now to secure a dominant position later. These are the Stars: high market share in markets that are still expanding rapidly.

Forestar Group Inc.'s Star category is anchored by its national lot development platform, which is aggressively pursuing market share in a fragmented industry. The intermediate-term goal is clear: capture a 5% market share in the U.S. single-family residential lot development industry, a significant leap from the 2.1% achieved in fiscal year 2024. This ambition requires substantial, ongoing capital deployment.

The growth engine is fueled by Forestar Group Inc.'s presence in high-growth Sunbelt markets. These areas, including Texas, Florida, and the Carolinas, are characterized by demand for finished lots that consistently outpaces current supply. To capitalize on this, Forestar Group Inc. planned strategic land investments of approximately $2.0 billion for fiscal 2025 to secure the inventory needed to fuel future volume.

The visibility into this growth is strong, backed by a substantial contracted backlog. As of September 30, 2025, Forestar Group Inc. had 23,800 lots under contract to be sold, which translates to approximately $2.1 billion of future revenue. This backlog represents 37% of the total owned lot position at that date.

The strategic focus within these high-growth areas is on the segments that need supply the most. Forestar Group Inc. concentrates on entry-level and first-time move-up housing, a segment facing persistent undersupply, which helps support strong pricing power, evidenced by an average sales price per lot of $115,700 in the fourth quarter of fiscal 2025.

Here is a snapshot of the scale and investment supporting these Star operations as of the end of fiscal 2025:

The investment required to maintain this leadership position is significant, which is why Stars consume large amounts of cash-often resulting in a near break-even cash flow situation in the short term. Forestar Group Inc.'s strong balance sheet, with a net debt to total capital ratio of 19.3% and liquidity of $968.1 million at year-end 2025, is what allows this aggressive investment strategy to continue.

The key operational indicators for these growth drivers include:

• Target market share for the national platform: 5%.
• Geographic footprint: Operations across 24 states.
• Focus segment: Entry-level and first-time move-up housing.
• Lots sold in FY2025: 14,240 lots.

If Forestar Group Inc. successfully maintains this market share as the high-growth Sunbelt markets eventually mature, these units are positioned to transition into Cash Cows, generating sustained, high-margin returns without the same level of required capital expenditure for expansion.

Forestar Group Inc. (FOR) - BCG Matrix: Cash Cows

Cash cows are market leaders that generate more cash than they consume, which is precisely what Forestar Group Inc. achieves through its core business model supporting its majority owner.

The guaranteed lot sales structure provides a foundation of high-volume, predictable cash flow, even if the exact delivery percentage to D.R. Horton is not explicitly stated as 85-90% for FY2025 in the latest reports. However, the revenue concentration is evident: revenue from lot sales to D.R. Horton was $1.28 billion for fiscal 2025, representing a significant portion of the total consolidated revenues. $1.28 billion in revenue from the majority owner is the engine of this segment.

Forestar Group Inc. reported consolidated revenues of $1.66 billion for the full fiscal year ended September 30, 2025. This figure reflects a 10% increase year-over-year from fiscal 2024, demonstrating the stability and scale of this mature business segment. This high-volume revenue stream is the definition of a cash cow's output.

The balance sheet reflects a position of strength, allowing for passive cash generation rather than heavy debt servicing. The net debt to total capital ratio at the end of fiscal 2025 was a conservative 19.3%. This low leverage ratio means less cash is consumed by debt service, maximizing the net cash flow available for corporate needs.

Forestar Group Inc.'s disciplined, short-duration land development model is designed for efficiency and high asset turns, supporting the cash cow status. The company delivered 14,240 finished lots in fiscal 2025. Supporting this high output, the company held 8,900 fully developed lots as of September 30, 2025, indicating a continuous pipeline ready for sale.

Here's a look at the scale and financial structure supporting this segment:

The operational focus ensures that cash generation is prioritized over speculative, long-term investment, which is characteristic of milking a cash cow:

• Owned and controlled lot position as of September 30, 2025: 99,800 lots.
• Total liquidity at fiscal year end: $968.1 million.
• Net income for fiscal 2025: $167.9 million.
• Book value per share increased 11% to $34.78.

The relationship with D.R. Horton secures the high market share in a mature segment of the lot development business. As of September 30, 2025, 17,600 of Forestar Group Inc.'s owned lots were subject to a right of first offer to D.R. Horton based on executed purchase and sale agreements. This relationship provides the necessary demand certainty to keep the cash flow steady.

Forestar Group Inc. (FOR) - BCG Matrix: Dogs

Dogs, are units or products with a low market share and low growth rates. They frequently break even, neither earning nor consuming much cash. Dogs are generally considered cash traps because businesses have money tied up in them, even though they bring back almost nothing in return. These business units are prime candidates for divestiture.

For Forestar Group Inc., assets fitting the Dog profile are those that do not meet the strict underwriting requirement of a minimum 15% return on average inventory and return of the entire phase 1 investment in 36 months or less, as stated in their June 30, 2025, investor presentation. The overall trend in profitability suggests that some assets may be falling into this category, as the Return on Equity (ROE) for the trailing twelve months ended September 30, 2025, was reported at 10.1%, down from 13.8% for the full fiscal year 2024.

The pressure on returns is evident in the margin compression experienced through fiscal 2025. Gross profit margins fell to 20.4% from 22.5% over the last year, and the net profit margin stood at 10.1% as of October 2025, compared to 13.5% a year prior. This erosion suggests that certain segments or older projects are struggling to generate adequate returns in the current environment.

You need to watch for these specific areas that could be classified as Dogs:

• Legacy, non-core land holdings that fall outside the current 64-market, 23-state focus as of September 30, 2025.
• Projects situated in slow-growth or highly regulated markets that are yielding returns below the internal hurdle rate, such as those that might have been acquired before the D.R. Horton partnership began prioritizing the current high-velocity model.
• Undeveloped land parcels acquired before the D.R. Horton partnership that do not align with the current high-velocity model, potentially tying up capital without immediate development or sale prospects.
• Any lot inventory that requires deep, margin-eroding price cuts to move, which is a defintely risk in a choppy market, especially if it is not under contract.

The sheer scale of the land position means that even a small percentage of underperforming assets can represent significant trapped capital. At September 30, 2025, Forestar Group Inc. had 106,000 lots owned and controlled, with 65,100 lots owned. Of the owned lots, 23,800 lots, or 37%, were under contract for an aggregate remaining sales price of approximately $\text{\$2.1}$ billion.

Here's a look at the trend in key financial metrics that inform the Dog assessment:

The company's forward guidance for fiscal 2026 suggests a focus on core volume, expecting to deliver between 14,000 and 15,000 lots, generating $\text{\$1.6}$ billion to $\text{\$1.7}$ billion of revenue. This focus on a tighter, more predictable range, supported by a record backlog of lots under contract representing $\text{\$2.3}$ billion in future secured revenue (as of Oct 2025), implies a strategic move away from assets that require expensive turn-around plans.

Forestar Group Inc. (FOR) - BCG Matrix: Question Marks

The Question Marks quadrant represents business units or product lines operating in high-growth markets but possessing a low relative market share. For Forestar Group Inc., these areas are characterized by significant investment to rapidly capture market share before they stagnate into Dogs, or successfully transition into Stars. The current data shows high investment activity and strategic shifts aimed at increasing market penetration outside of its core relationship.

The need to increase market share quickly is evident in the strategic focus on diversifying the customer base away from its primary homebuilder partner. While the relationship remains foundational, the push for external sales consumes resources and represents a high-risk, high-reward growth avenue.

The following table summarizes key operational and financial metrics from the most recent reporting periods that illustrate the high-growth/high-investment nature of these Question Mark initiatives as of late 2025.

The strategy to grow market share outside the main customer base is a clear Question Mark play, requiring cash deployment for new relationships and market penetration. The low percentage of sales to others highlights the low current share in this growth segment.

• Lots sold to customers other than D.R. Horton in Q3 2025 totaled 530 lots.
• The long-term goal is to have 1 in 3 D.R. Horton homes built on Forestar-developed lots, indicating significant headroom for growth in the core market as well.
• The company's owned lot position at September 30, 2025, included 23,800 lots under contract, representing approximately $2.1 billion of future revenue.
• The total owned and controlled lot position at June 30, 2025, was 102,300 lots.

The high investment in raw inventory, which carries duration risk, is the cash consumption aspect of the Question Mark quadrant. While the ASP jump in Q4 2025 is positive, the simultaneous 9% drop in lot sales volume and margin pressure suggest that the market is testing the affordability of these higher-priced lots, demanding heavy investment to secure future volume.

The financial health is currently supporting this investment phase, which is critical for Question Marks. The company ended the fiscal year with total liquidity of $968.1 million and a conservative net debt to total capital ratio of 19.3%. This strong balance sheet provides the necessary fuel to invest heavily in land banking and market expansion initiatives, aiming to convert these high-growth opportunities into Stars.