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Forestar Group Inc. (FOR) Intrinsic Value

DCF-based fair value calculation with Bear, Base, and Bull scenarios

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Forestar Group Inc. (FOR)

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Intrinsic Value (DCF)

Current$27.91
→
Intrinsic$112.50
+303%
$79.65$112.50$174.85
Market implies 1% growth for 5 years
DCF analysis suggests FOR could have 303% upside at 21% growth — verify assumptions match your view.
At $28, the market prices in only 1% growth — below historical 21%, suggesting low expectations.
Range: Bear $80 → Bull $175. Current price implies expectations below the bear case — very conservative expectations.
Discount ↓Growth →17%19%21%23%
8%$135$146$157$169
10%$98$105$112$121
12%$77$82$88$94
14%$64$68$73$77

Bull Case

  • Bull case ($175) offers 526% upside at 25% growth, 9% discount
  • Price below even worst-case scenario — strong margin of safety
  • Market-implied growth (1%) ≤ historical CAGR (21%)

Bear Case

  • Bear case ($80) with 17% growth, 12% discount rate
  • Using 21% growth — aggressive, watch for mean reversion
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5-Year FFO Projection

Year 1$207.67M
Year 2$251.62M
Year 3$304.86M
Year 4$369.38M
Year 5$447.54M
Terminal$6.59B

📐 Model Inputs

Growth Rate21.2%5Y CAGR (cascade: 5Y→3Y→TTM)
Discount Rate10.0%WACC estimate
Terminal Growth3.0%Perpetuity rate
Base FFO$171.40MTTM actual
Bear g×0.8, r+2%
Base Historical CAGR
Bull g×1.2, r−1.5%
ℹ️

DCF estimates based on historical growth rates extrapolated forward. Uses FFO per NAREIT standards. See FAQ below for full methodology.

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Frequently Asked Questions

Is FOR stock undervalued or overvalued?
🟢 UNDERVALUED

FOR trades at $27.91 vs. our DCF-derived intrinsic value of $108.03, implying +300% upside. At a 10.0% WACC and 21.2% projected FCF growth, the market appears to be underpricing the present value of FOR's future cash flows. The bear case ($74.11) still suggests upside, providing margin of safety.

What is FOR's intrinsic value?

Using a 5-year DCF model: Base FCF of $171M, projected at 21.2% 5Y CAGR (best of revenue, EPS, or FCF growth), discounted at 10.0% WACC, with 3.0% terminal growth. Terminal value calculated via Gordon Growth Model: TV = FCF₅ × (1+g) / (WACC−g). After deducting $-481M net debt and dividing by 0.05B shares: Bear $74.11 | Base $108.03 | Bull $157.99. Current price $27.91 implies +300% to base case.

How is FOR's fair value calculated?

DCF Methodology:

① Project FCF years 1-5 using 21.2% growth derived from 5-year historical CAGR (best of revenue, EPS, or FCF growth, with 8% floor and 25% cap).

② Calculate terminal value at year 5 using perpetuity growth model with g=3.0%.

③ Discount all cash flows to PV using WACC=10.0%.

④ Sum PV of explicit period + PV of terminal value = Enterprise Value ($5.02B).

⑤ Subtract net debt, divide by shares outstanding.

Sensitivity analysis available above—adjust WACC ±2% or growth ±3% to stress-test the valuation. Implied EV/FCF multiple: 29.3x.