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In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 1.3% and 8.1%, respectively. Earnings and revenues of this homebuilding company grew 78% and 35%, respectively, from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in the last 10 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has trended 1.4% downward over the past 30 days to $3.40 per share. Nonetheless, this indicates a 51.8% increase from the year-ago earnings of $2.24 per share. The consensus mark for revenues is $7.79 billion, suggesting a 21.8% year-over-year improvement.
Fiscal fourth-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 historically 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.
Yet, the U.S. housing market has been grappling with uncertainties arising from skyrocketing home prices. This may reflect on its new orders for the quarter. Also, higher land, labor and material costs are expected to reflect on fiscal fourth-quarter margins to some extent. Importantly, the company has been witnessing significant supply chain disruptions, including shortages and delayed delivery of certain building materials along with a tight labor market. This may create difficulties in fulfilling customer demand, thereby affecting deliveries.
Owing to reduced closing volume, partially offset by an increase in the average sales price of homes closed, D.R. Horton recently reduced its fourth-quarter fiscal 2021 guidance for homes closed, consolidated revenues and home sales gross margin. It now expects fiscal fourth-quarter revenues between $7.7 billion and $7.9 billion compared with the prior projected range of $7.9-$8.4 billion. Also, it now expects fiscal 2021 revenues to rise 35-36% from a year ago to $27.4-$27.6 billion versus the previous guidance of $27.6-$28.1 billion.
The Zacks Consensus Estimate for Homebuilding revenues of $7.6 billion suggests a 23.5% increase from a year ago.
The same for Financial Services revenues of $211 million suggests a 4.5% decrease from a year ago.
The same for Forestar revenues of $139 million suggests a decrease from the year-ago level of $348 million.
Other Projections
It now expects fiscal fourth-quarter homes closed within 21,300-21,700 compared with 23,000-24,500 expected earlier. The Zacks Consensus Estimate for homes closed is pegged at 21,967 units, implying an improvement of 8.5% from the year-ago period.
Nonetheless, the company now expects gross margin within 26.5-26.8% for the fiscal fourth quarter (it was 22.7% a year ago) compared with 26-26.3% expected earlier. The uptrend in gross margin expectation is primarily backed by strong new home demand and limited housing supply that has been supporting pricing power across the majority of its operating footprint. The mixed pattern in housing fundamentals is likely to have had a limited impact on D.R. Horton’s fiscal fourth-quarter earnings.
The consensus estimate for net sales orders is currently pegged at 17,410 units. This suggests a 26.6% decrease from a year ago. The consensus estimate for the value of the backlog is $9.5 billion, implying a 55.2% 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: The company has an Earnings ESP of +0.79%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
PulteGroup Inc. (PHM - Free Report) — which currently holds a Zacks Rank #4 (Sell) — reported third-quarter 2021 results, wherein earnings and revenues missed the Zacks Consensus Estimate, as major disruptions in the manufacture and supply of building products have been extending overall build cycles.
NVR, Inc. (NVR - Free Report) reported lower-than-expected earnings for third-quarter 2021. Nonetheless, the top and the bottom line improved impressively from the year-ago period on the back of solid demand. The stock currently has a Zacks Rank #3.
Meritage Homes Corporation (MTH - Free Report) reported third-quarter 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate, defying the ongoing industry-wide supply-chain disruptions. Also, the top and the bottom line improved significantly on a year-over-year basis. Revenues and earnings topped the Zacks Consensus Estimate for the 12th straight quarter. The stock currently has a Zacks Rank #1.
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D.R. Horton (DHI) Gears Up for Q4 Earnings: What's in Store?
D.R. Horton Inc. (DHI - Free Report) is scheduled to report fourth-quarter fiscal 2021 (ended Sep 30, 2021) results on Nov 9, before the opening bell.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 1.3% and 8.1%, respectively. Earnings and revenues of this homebuilding company grew 78% and 35%, respectively, from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in the last 10 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has trended 1.4% downward over the past 30 days to $3.40 per share. Nonetheless, this indicates a 51.8% increase from the year-ago earnings of $2.24 per share. The consensus mark for revenues is $7.79 billion, suggesting a 21.8% year-over-year improvement.
D.R. Horton, Inc. Price and EPS Surprise
D.R. Horton, Inc. price-eps-surprise | D.R. Horton, Inc. Quote
Factors to Note
Fiscal fourth-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 historically 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.
Yet, the U.S. housing market has been grappling with uncertainties arising from skyrocketing home prices. This may reflect on its new orders for the quarter. Also, higher land, labor and material costs are expected to reflect on fiscal fourth-quarter margins to some extent. Importantly, the company has been witnessing significant supply chain disruptions, including shortages and delayed delivery of certain building materials along with a tight labor market. This may create difficulties in fulfilling customer demand, thereby affecting deliveries.
Owing to reduced closing volume, partially offset by an increase in the average sales price of homes closed, D.R. Horton recently reduced its fourth-quarter fiscal 2021 guidance for homes closed, consolidated revenues and home sales gross margin. It now expects fiscal fourth-quarter revenues between $7.7 billion and $7.9 billion compared with the prior projected range of $7.9-$8.4 billion. Also, it now expects fiscal 2021 revenues to rise 35-36% from a year ago to $27.4-$27.6 billion versus the previous guidance of $27.6-$28.1 billion.
The Zacks Consensus Estimate for Homebuilding revenues of $7.6 billion suggests a 23.5% increase from a year ago.
The same for Financial Services revenues of $211 million suggests a 4.5% decrease from a year ago.
The same for Forestar revenues of $139 million suggests a decrease from the year-ago level of $348 million.
Other Projections
It now expects fiscal fourth-quarter homes closed within 21,300-21,700 compared with 23,000-24,500 expected earlier. The Zacks Consensus Estimate for homes closed is pegged at 21,967 units, implying an improvement of 8.5% from the year-ago period.
Nonetheless, the company now expects gross margin within 26.5-26.8% for the fiscal fourth quarter (it was 22.7% a year ago) compared with 26-26.3% expected earlier. The uptrend in gross margin expectation is primarily backed by strong new home demand and limited housing supply that has been supporting pricing power across the majority of its operating footprint. The mixed pattern in housing fundamentals is likely to have had a limited impact on D.R. Horton’s fiscal fourth-quarter earnings.
The consensus estimate for net sales orders is currently pegged at 17,410 units. This suggests a 26.6% decrease from a year ago. The consensus estimate for the value of the backlog is $9.5 billion, implying a 55.2% 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: The company has an Earnings ESP of +0.79%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: D.R. Horton currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Peer Releases
PulteGroup Inc. (PHM - Free Report) — which currently holds a Zacks Rank #4 (Sell) — reported third-quarter 2021 results, wherein earnings and revenues missed the Zacks Consensus Estimate, as major disruptions in the manufacture and supply of building products have been extending overall build cycles.
NVR, Inc. (NVR - Free Report) reported lower-than-expected earnings for third-quarter 2021. Nonetheless, the top and the bottom line improved impressively from the year-ago period on the back of solid demand. The stock currently has a Zacks Rank #3.
Meritage Homes Corporation (MTH - Free Report) reported third-quarter 2021 results, wherein earnings and revenues surpassed the Zacks Consensus Estimate, defying the ongoing industry-wide supply-chain disruptions. Also, the top and the bottom line improved significantly on a year-over-year basis. Revenues and earnings topped the Zacks Consensus Estimate for the 12th straight quarter. The stock currently has a Zacks Rank #1.