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Will D.R. Horton (DHI) be Able to Top Q1 Earnings Estimates?

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D.R. Horton Inc. (DHI - Free Report) is scheduled to report first-quarter fiscal 2021 (ended Dec 31, 2020) results on Jan 26, before the opening bell.

In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 27.3% and 8.8%, respectively. Earnings and revenues of this homebuilding company grew 65.9% and 27%, respectively, from the year-ago reported figures.

Markedly, D.R. Horton reported better-than-expected earnings in the last seven quarters.

Trend in Estimate Revision

The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has trended 0.6% upward over the past 30 days to $1.72 per share. This indicates a 73.7% increase from the year-ago earnings of 99 cents per share. The consensus mark for revenues is $5.60 billion, suggesting a 39.2% year-over-year improvement.

D.R. Horton, Inc. Price and EPS Surprise

D.R. Horton, Inc. Price and EPS Surprise

D.R. Horton, Inc. price-eps-surprise | D.R. Horton, Inc. Quote

Factors to Consider

D.R. Horton is likely to have witnessed impressive growth in first-quarter fiscal 2021, given resilient housing market conditions in the United States. The company’s fiscal first-quarter Homebuilding revenues (which account for 96.7% of total revenues) are expected to have increased from the year-ago level, buoyed by solid U.S. housing market fundamentals. D.R. Horton — one of the country’s largest homebuilders — has been benefiting from resilient housing market conditions backed by record low mortgage rates, lack of available supply and a highly motivated buyer. Also, buyers have been seeking homes in lower-density areas, thereby giving a boost to new home construction in such regions.

In addition to solid industry fundamentals, the company’s industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands are expected to have aided revenues.

The Zacks Consensus Estimate for Homebuilding revenues of $5.49 billion suggests a 41.5% increase from a year ago.

The same for Financial Services revenues of $154 million suggests a 49.5% increase from a year ago.

Meanwhile, lower average selling price to address the affordability concern is expected to put pressure on the upcoming results to some extent. Also, higher land, labor and material costs are expected to reflect on fiscal first-quarter margins.

Other Projections

The company expects to generate consolidated revenues of $5.4-$5.6 billion. Homes closed are likely to be between 17,500 and 18,000 homes. It expects home sales gross margin for the fiscal first quarter to be 23% and homebuilding SG&A to be 8.9% of homebuilding revenues.

The Zacks Consensus Estimate for homes closed is pegged at 18,080 units, implying an improvement of 39.5% from the year-ago period.

The consensus estimate for net sales orders is currently pegged at 17,415 units. This suggests a 32.7% increase from a year ago. The consensus estimate for the value of the backlog is $7.98 billion, implying an 88.9% improvement from fourth-quarter fiscal 2020.

What the Zacks Model Says

Our proven model predicts an earnings beat for D.R. Horton this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat.

Earnings ESP: D.R. Horton has an Earnings ESP of +8.91%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

Zacks Rank: D.R. Horton — which shares space with KB Home (KBH - Free Report) , PulteGroup (PHM - Free Report) and NVR, Inc. (NVR - Free Report) in the Zacks Building Products - Home Builders industry — currently carries a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

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