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D.R. Horton (DHI) to Post Q2 Earnings: What's in the Offing?
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D.R. Horton Inc. (DHI) is scheduled to report second-quarter fiscal 2022 (ended Mar 31, 2022) results on Apr 26, before the opening bell.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 13.2% and 4.4%, respectively. Earnings and revenues of this homebuilding company grew 48.1% and 18.9%, respectively, from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in the last 12 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has moved north over the past seven days to $3.39 from $3.38 per share. This indicates a 34% increase from the year-ago earnings of $2.53 per share. The consensus mark for revenues is $7.62 billion, suggesting an 18.2% year-over-year improvement.
Fiscal second-quarter Homebuilding revenues (which account for nearly 96% of total revenues) are expected to have increased from the year-ago level, given higher demand. D.R. Horton — one of the country’s largest homebuilders — has been benefiting from the 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, 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 have impacted DHI’s orders to some extent.
Also, higher land, labor and material costs are expected to reflect on fiscal second-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 have created difficulties for DHI in fulfilling customer demand, thereby affecting deliveries.
Yet, inflationary pressures have been a cause of concern. The companies in the industry have been experiencing significant material cost inflation along with escalating land, labor and material costs. Also, the adverse effects of tightening global and domestic supply chains may have been a concern.
The Zacks Consensus Estimate for Homebuilding revenues of $7.3 billion suggests an 18.2% increase from a year ago.
The same for Financial Services revenues of $211 million suggests a decrease from the year-ago level of $225 million.
Other Projections
DHI expects to generate consolidated revenues of $7.3-$7.7 billion for the fiscal second quarter. It expects fiscal second-quarter homes closed within 19,000-20,000. The Zacks Consensus Estimate for homes closed is pegged at 19,843 units, implying growth of 0.7% from the year-ago period.
DHI expects home sales gross margin for the fiscal second quarter to improve sequentially as well as year over year. It expects the metric to be 27.5%, indicating an increase from 24.6% a year ago and 27.4% in the last reported quarter. DHI anticipates homebuilding SG&A (as a percentage of revenues) for the fiscal second quarter to be 7.5%.
Financial services pre-tax profit margin is expected in the range of 30-35% and income tax rate is likely to be 24% for the fiscal second quarter.
The company expects fiscal second-quarter net sales orders to be in line with the year-ago level.
The consensus estimate for net sales orders is currently pegged at 27,293 units. This suggests an increase from 27,059 units a year ago. The consensus estimate for the value of the backlog is $14.26 billion, implying an improvement from $11.61 billion in second-quarter fiscal 2021.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for D.R. Horton for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: DHI has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Summit Materials, Inc. (SUM - Free Report) has an Earnings ESP of +5.26% and sports a Zacks Rank #1.
SUM’s earnings topped the consensus mark in three of the last four quarters, with the average being 7.5%.
PotlatchDeltic Corporation (PCH - Free Report) has an Earnings ESP of +7.24% and holds a Zacks Rank #2.
PCH’s earnings topped the consensus mark in three of the last four quarters, with the average being 6.4%.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #2.
In the trailing four quarters, KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 10.4%.
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D.R. Horton (DHI) to Post Q2 Earnings: What's in the Offing?
D.R. Horton Inc. (DHI) is scheduled to report second-quarter fiscal 2022 (ended Mar 31, 2022) results on Apr 26, before the opening bell.
In the last reported quarter, the company’s earnings and revenues topped the Zacks Consensus Estimate by 13.2% and 4.4%, respectively. Earnings and revenues of this homebuilding company grew 48.1% and 18.9%, respectively, from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in the last 12 quarters.
Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has moved north over the past seven days to $3.39 from $3.38 per share. This indicates a 34% increase from the year-ago earnings of $2.53 per share. The consensus mark for revenues is $7.62 billion, suggesting an 18.2% 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 second-quarter Homebuilding revenues (which account for nearly 96% of total revenues) are expected to have increased from the year-ago level, given higher demand. D.R. Horton — one of the country’s largest homebuilders — has been benefiting from the 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, 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 have impacted DHI’s orders to some extent.
Also, higher land, labor and material costs are expected to reflect on fiscal second-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 have created difficulties for DHI in fulfilling customer demand, thereby affecting deliveries.
Yet, inflationary pressures have been a cause of concern. The companies in the industry have been experiencing significant material cost inflation along with escalating land, labor and material costs. Also, the adverse effects of tightening global and domestic supply chains may have been a concern.
The Zacks Consensus Estimate for Homebuilding revenues of $7.3 billion suggests an 18.2% increase from a year ago.
The same for Financial Services revenues of $211 million suggests a decrease from the year-ago level of $225 million.
Other Projections
DHI expects to generate consolidated revenues of $7.3-$7.7 billion for the fiscal second quarter. It expects fiscal second-quarter homes closed within 19,000-20,000. The Zacks Consensus Estimate for homes closed is pegged at 19,843 units, implying growth of 0.7% from the year-ago period.
DHI expects home sales gross margin for the fiscal second quarter to improve sequentially as well as year over year. It expects the metric to be 27.5%, indicating an increase from 24.6% a year ago and 27.4% in the last reported quarter. DHI anticipates homebuilding SG&A (as a percentage of revenues) for the fiscal second quarter to be 7.5%.
Financial services pre-tax profit margin is expected in the range of 30-35% and income tax rate is likely to be 24% for the fiscal second quarter.
The company expects fiscal second-quarter net sales orders to be in line with the year-ago level.
The consensus estimate for net sales orders is currently pegged at 27,293 units. This suggests an increase from 27,059 units a year ago. The consensus estimate for the value of the backlog is $14.26 billion, implying an improvement from $11.61 billion in second-quarter fiscal 2021.
What the Zacks Model Unveils
Our proven model does not conclusively predict an earnings beat for D.R. Horton for the quarter to be reported. That is because a stock needs to have both a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) for this to happen. Unfortunately, that is not the case here, as you will see below.
Earnings ESP: DHI has an Earnings ESP of 0.00%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: It currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
Stocks With Favorable Combination
Here are some companies in the Zacks Construction sector, which according to our model have the right combination of elements to post an earnings beat in their respective quarters to be reported.
Summit Materials, Inc. (SUM - Free Report) has an Earnings ESP of +5.26% and sports a Zacks Rank #1.
SUM’s earnings topped the consensus mark in three of the last four quarters, with the average being 7.5%.
PotlatchDeltic Corporation (PCH - Free Report) has an Earnings ESP of +7.24% and holds a Zacks Rank #2.
PCH’s earnings topped the consensus mark in three of the last four quarters, with the average being 6.4%.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +6.64% and a Zacks Rank #2.
In the trailing four quarters, KBR’s earnings topped the consensus mark in all the last four quarters, with the average being 10.4%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.