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Is a Beat in Store for D.R. Horton (DHI) in Q1 Earnings?
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D.R. Horton Inc. (DHI - Free Report) is slated to report first-quarter fiscal 2024 (ended Dec 31, 2023) results on Jan 23, before the opening bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 11.8% and 4.5%, respectively. Yet, earnings of this homebuilding company declined 4.7%, but revenues were up 9% from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in 18 of the last 19 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has increased to $2.88 from $2.87 over the past 30 days. The estimated figure indicates a 4.4% increase from the year-ago EPS of $2.76. The consensus mark for revenues is $7.62 billion, suggesting 5% year-over-year growth.
D.R. Horton’s Homebuilding revenues are expected to have improved in the fiscal first quarter from the year-ago level owing to higher homes closed, given a lack of existing homes for sale in the market. 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 $7.4-$7.6 billion for the quarter (compared with $7.3 billion a year ago). Homes closed are anticipated within 18,500-19,000 units.
Our model predicts Homebuilding revenues to grow 4.1% year over year to $7 billion in the quarter. However, the metric is expected to have declined from $8.8 billion reported in the prior quarter. The average selling price of homes closed is expected to be down 2.9% year over year to $375,800 in the fiscal first quarter. Homes closed are expected to be 18,643 units, up 7.5% year over year but down 18.7% sequentially.
We expect Financial Services revenues of $156.3 million, which suggests growth of 14.1% from the year-ago level of $137 million.
Other Projections
Meanwhile, higher land, labor and material costs are expected to have reflected in the fiscal first-quarter margins. The tight labor market is a concern. DHI expects the home sales gross margin for the fiscal first quarter to be in the range of 23.7-24.2%, reflecting a decrease from 23.9% a year ago. Our model predicts home sales gross margins to be 24% in the fiscal first quarter compared with 23.9% in the prior-year quarter.
DHI expects homebuilding SG&A, as a percentage of revenues, to be between 7.7% and 7.9% (versus 7.8% reported a year ago). Financial Services pretax profit margin is likely to be in the range of 20-25%, and the income tax rate is expected to be 24-24.5% in the quarter. We expect homebuilding SG&A to be 7.8% of homebuilding revenues and Financial Services pretax profit margin to be 23.7% for the quarter.
Our model predicts net sales orders to increase 33.4% year over year to 17,857 units. The same for backlog is currently pegged at 14,411 units, which suggests a decrease from 15,759 units reported a year ago. Our model predicts the value of the backlog to be $5.66 billion, implying a decline from $6.22 billion in the corresponding fiscal 2023 quarter.
What the Zacks Model Unveils
Our proven model predicts 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. This is exactly the case here, as you will see below.
Earnings ESP: DHI has an Earnings ESP of +1.18%. 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.
Other 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.
MTH’s earnings topped the consensus mark in all the last four quarters, with the average being 25.8%. Earnings for the to-be-reported quarter are expected to decline 27% year over year.
THOR Industries, Inc. (THO - Free Report) has an Earnings ESP of +0.22% and carries a Zacks Rank #3.
THO’s earnings beat the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 32.7%. Earnings for the to-be-reported quarter are expected to grow 50% year over year.
Trex Company, Inc. (TREX - Free Report) has an Earnings ESP of +10.6% and carries a Zacks Rank #3.
TREX’s earnings surpassed the consensus mark in all the last four quarters, the average surprise being 16.9%. Earnings for the to-be-reported quarter are expected to decline 17.4% year over year.
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Is a Beat in Store for D.R. Horton (DHI) in Q1 Earnings?
D.R. Horton Inc. (DHI - Free Report) is slated to report first-quarter fiscal 2024 (ended Dec 31, 2023) results on Jan 23, before the opening bell.
In the last reported quarter, the company’s earnings and revenues surpassed the Zacks Consensus Estimate by 11.8% and 4.5%, respectively. Yet, earnings of this homebuilding company declined 4.7%, but revenues were up 9% from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in 18 of the last 19 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has increased to $2.88 from $2.87 over the past 30 days. The estimated figure indicates a 4.4% increase from the year-ago EPS of $2.76. The consensus mark for revenues is $7.62 billion, suggesting 5% year-over-year growth.
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 improved in the fiscal first quarter from the year-ago level owing to higher homes closed, given a lack of existing homes for sale in the market. 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 $7.4-$7.6 billion for the quarter (compared with $7.3 billion a year ago). Homes closed are anticipated within 18,500-19,000 units.
Our model predicts Homebuilding revenues to grow 4.1% year over year to $7 billion in the quarter. However, the metric is expected to have declined from $8.8 billion reported in the prior quarter. The average selling price of homes closed is expected to be down 2.9% year over year to $375,800 in the fiscal first quarter. Homes closed are expected to be 18,643 units, up 7.5% year over year but down 18.7% sequentially.
We expect Financial Services revenues of $156.3 million, which suggests growth of 14.1% from the year-ago level of $137 million.
Other Projections
Meanwhile, higher land, labor and material costs are expected to have reflected in the fiscal first-quarter margins. The tight labor market is a concern. DHI expects the home sales gross margin for the fiscal first quarter to be in the range of 23.7-24.2%, reflecting a decrease from 23.9% a year ago. Our model predicts home sales gross margins to be 24% in the fiscal first quarter compared with 23.9% in the prior-year quarter.
DHI expects homebuilding SG&A, as a percentage of revenues, to be between 7.7% and 7.9% (versus 7.8% reported a year ago). Financial Services pretax profit margin is likely to be in the range of 20-25%, and the income tax rate is expected to be 24-24.5% in the quarter. We expect homebuilding SG&A to be 7.8% of homebuilding revenues and Financial Services pretax profit margin to be 23.7% for the quarter.
Our model predicts net sales orders to increase 33.4% year over year to 17,857 units. The same for backlog is currently pegged at 14,411 units, which suggests a decrease from 15,759 units reported a year ago. Our model predicts the value of the backlog to be $5.66 billion, implying a decline from $6.22 billion in the corresponding fiscal 2023 quarter.
What the Zacks Model Unveils
Our proven model predicts 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. This is exactly the case here, as you will see below.
Earnings ESP: DHI has an Earnings ESP of +1.18%. 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.
Other 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.
Meritage Homes Corporation (MTH - Free Report) has an Earnings ESP of +2.85% and carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
MTH’s earnings topped the consensus mark in all the last four quarters, with the average being 25.8%. Earnings for the to-be-reported quarter are expected to decline 27% year over year.
THOR Industries, Inc. (THO - Free Report) has an Earnings ESP of +0.22% and carries a Zacks Rank #3.
THO’s earnings beat the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 32.7%. Earnings for the to-be-reported quarter are expected to grow 50% year over year.
Trex Company, Inc. (TREX - Free Report) has an Earnings ESP of +10.6% and carries a Zacks Rank #3.
TREX’s earnings surpassed the consensus mark in all the last four quarters, the average surprise being 16.9%. Earnings for the to-be-reported quarter are expected to decline 17.4% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.