We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 43.7% and 21.6%, respectively. Yet, earnings of this homebuilding company declined 32.3%, and revenues were down 0.3% from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in 16 of the last 17 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 1.1% to $11.18 per share over the past 60 days. The estimated figure indicates a 39.8% decrease from the year-ago earnings of $4.67 per share. The consensus mark for revenues is $8.3 billion, suggesting a 5.3% year-over-year decline.
D.R. Horton’s Homebuilding revenues are expected to have declined in the fiscal third quarter from the year-ago level owing to the tough comparison. Although the company’s home sales are expected to have witnessed tough year-over-year comparisons, DHI will likely generate sequentially higher sales, given a lack of existing homes for sale and more stabilized mortgage rates. Also, the company’s industry-leading market share, acquisitions, broad geographic footprint and affordable product offerings across multiple brands might have somewhat aided the top line.
DHI anticipates total revenues of $8-$8.5 billion for the quarter (compared with $8.79 billion a year ago). Homes closed are anticipated within 20,000-21,000 units.
Our model predicts Homebuilding revenues to decline 6.4% year over year to $7.81 billion in the quarter. However, the metric is expected to have improved from $7.47 billion reported in the prior quarter. The average selling price of homes closed is expected to be down 3% year over year to $379,300 in the fiscal third quarter.
We expect Financial Services revenues of $183.2 million, which suggests a fall of 28% from the year-ago level of $254.3 million.
Other Projections
Meanwhile, higher land, labor and material costs are expected to have reflected in the fiscal third-quarter margins. The tight labor market is a concern. DHI expects the home sales gross margin for the fiscal third quarter to be in the range of 21-22%, reflecting a decrease from 30.1% a year ago. DHI expects homebuilding SG&A, as a percentage of revenues, to be between 7.2% and 7.5% (versus 6.6% reported a year ago). Financial services pretax profit margin is likely to be around 30%, and the income tax rate is expected to be between 24% and 24.5% in the quarter.
Our model predicts net sales orders to increase 38.9% year over year to 23,178 units. The same for backlog is currently pegged at 21,876 units, which suggests a decrease from 29,244 units reported a year ago. Our model predicts the value of the backlog to be $7.76 billion, implying a decline from $11.92 billion in the corresponding fiscal 2022 quarter.
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 -2.23%. 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.
Stocks With Favorable Combinations
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 on their respective quarters to be reported.
PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #2.
PHM’s earnings missed the consensus mark once but beat the same on three other occasions, the average surprise being 15.6%. Earnings for the to-be-reported quarter are expected to decrease 9.5% year over year.
MDC’s earnings topped the consensus mark in two of the last four quarters and missed on other two occasions, the average being 27.8%. Earnings for the to-be-reported quarter are expected to decrease 73.4% year over year.
Taylor Morrison Home Corporation (TMHC - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2.
TMHC’s earnings topped the consensus mark in all the last four quarters, the average being 17.3%. Earnings for the to-be-reported quarter are expected to grow 26.9% year over year.
Image: Bigstock
D.R. Horton (DHI) to Report Q3 Earnings: What to Expect?
D.R. Horton Inc. (DHI - Free Report) is slated to report third-quarter fiscal 2023 (ended Jun 30, 2023) results on Jul 20, before the opening bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 43.7% and 21.6%, respectively. Yet, earnings of this homebuilding company declined 32.3%, and revenues were down 0.3% from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in 16 of the last 17 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings has increased 1.1% to $11.18 per share over the past 60 days. The estimated figure indicates a 39.8% decrease from the year-ago earnings of $4.67 per share. The consensus mark for revenues is $8.3 billion, suggesting a 5.3% year-over-year decline.
D.R. Horton, Inc. Price and EPS Surprise
D.R. Horton, Inc. price-eps-surprise | D.R. Horton, Inc. Quote
Factors to Note
D.R. Horton’s Homebuilding revenues are expected to have declined in the fiscal third quarter from the year-ago level owing to the tough comparison. Although the company’s home sales are expected to have witnessed tough year-over-year comparisons, DHI will likely generate sequentially higher sales, given a lack of existing homes for sale and more stabilized mortgage rates. Also, the company’s industry-leading market share, acquisitions, broad geographic footprint and affordable product offerings across multiple brands might have somewhat aided the top line.
DHI anticipates total revenues of $8-$8.5 billion for the quarter (compared with $8.79 billion a year ago). Homes closed are anticipated within 20,000-21,000 units.
Our model predicts Homebuilding revenues to decline 6.4% year over year to $7.81 billion in the quarter. However, the metric is expected to have improved from $7.47 billion reported in the prior quarter. The average selling price of homes closed is expected to be down 3% year over year to $379,300 in the fiscal third quarter.
We expect Financial Services revenues of $183.2 million, which suggests a fall of 28% from the year-ago level of $254.3 million.
Other Projections
Meanwhile, higher land, labor and material costs are expected to have reflected in the fiscal third-quarter margins. The tight labor market is a concern. DHI expects the home sales gross margin for the fiscal third quarter to be in the range of 21-22%, reflecting a decrease from 30.1% a year ago. DHI expects homebuilding SG&A, as a percentage of revenues, to be between 7.2% and 7.5% (versus 6.6% reported a year ago). Financial services pretax profit margin is likely to be around 30%, and the income tax rate is expected to be between 24% and 24.5% in the quarter.
Our model predicts net sales orders to increase 38.9% year over year to 23,178 units. The same for backlog is currently pegged at 21,876 units, which suggests a decrease from 29,244 units reported a year ago. Our model predicts the value of the backlog to be $7.76 billion, implying a decline from $11.92 billion in the corresponding fiscal 2022 quarter.
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 -2.23%. 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.
Stocks With Favorable Combinations
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 on their respective quarters to be reported.
PulteGroup, Inc. (PHM - Free Report) has an Earnings ESP of +0.69% and a Zacks Rank #2.
PHM’s earnings missed the consensus mark once but beat the same on three other occasions, the average surprise being 15.6%. Earnings for the to-be-reported quarter are expected to decrease 9.5% year over year.
M.D.C. Holdings, Inc. has an Earnings ESP of +4.17% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
MDC’s earnings topped the consensus mark in two of the last four quarters and missed on other two occasions, the average being 27.8%. Earnings for the to-be-reported quarter are expected to decrease 73.4% year over year.
Taylor Morrison Home Corporation (TMHC - Free Report) has an Earnings ESP of +0.90% and a Zacks Rank #2.
TMHC’s earnings topped the consensus mark in all the last four quarters, the average being 17.3%. Earnings for the to-be-reported quarter are expected to grow 26.9% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.