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Why Is D.R. Horton (DHI) Up 3.4% Since Last Earnings Report?
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It has been about a month since the last earnings report for D.R. Horton (DHI - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is D.R. Horton due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
D.R. Horton Q1 Earnings Miss, Orders Rise
D.R. Horton reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.
On a year-over-year basis, both the top and bottom lines increased. The upside was backed by the supply of both new and existing homes as affordable price points remain limited, and robust housing demand supported by favorable demographics amid elevated inflation and mortgage/interest rates.
Earnings, Revenues & Margin Discussion
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76.
Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
The consolidated pre-tax margin came in at 16.1% for the quarter.
Segment Details
Homebuilding revenues of $7.3 billion increased 8.2% from the prior-year quarter. Home sales were $7.28 billion, up 8.5% from a year ago period. Home closings rose 11.5% from the prior year’s quarter to 19,340 homes.
Net sales orders were up 35% year over year to 18,069 homes. The value of net orders also increased 38.7% year over year to $6.8 billion. The cancellation rate (on gross sales orders) was 19%, down from 27% a year ago.
Order backlog of homes at the end of the fiscal first quarter was 13,965 homes, down 11.4% year over year. Moreover, the value of the backlog was down 12.5% from the prior year to $5.4 billion.
Financial Services’ revenues decreased 40.6% from the year-ago level to $192.6 million.
Forestar contributed $305.9 million to total quarterly revenues with 3,150 lots sold, indicating growth from $216.7 million in revenues generated a year ago on 2,263 lots sold.
The Rental business generated revenues of $195.3 million for the quarter compared with $216.7 million a year ago.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.34 billion as of Dec 31, 2023 compared with $3.9 billion at the end of fiscal 2023. It had $3.1 billion of available capacity on the revolving credit facility at the end of 2023. Total homebuilding liquidity was $6.4 billion.
At the end of December 2023, DHI had 42,600 homes in inventory, of which 28,000 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 607,200 lots at the end of the first fiscal quarter. Of these, 24% were owned and 76% were controlled through land and lot purchase contracts.
At the end of first-quarter fiscal 2024, debt totaled $5.3 billion, with a debt to total capital of 18.6%. The trailing 12-month return on equity was 21.8%.
D.R. Horton repurchased 3.3 million shares of common stock for $398.3 million during the fiscal first quarter. In October 2023, its board authorized $1.5 billion shares of common stock, replacing the previous authorization ($32.8 million remaining of $234.0 million at the time of authorization due to repurchases made subsequent to year-end). The remaining stock repurchase authorization on Dec 31, 2023, was $1.3 billion.
Fiscal 2024 Views Updated
DHI raised the upper limit of its previously expected consolidated revenues by $0.3 billion to $36-$37.3 billion range. Homes closed are now anticipated within 87,000-90,000 units from the previously projected 86,000-89,000 units. The income tax rate is expected to be nearly 24%.
Fiscal 2024 cash flow from homebuilding operations is expected to be nearly $3 billion. Share repurchases are projected at approximately $1.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, D.R. Horton has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, D.R. Horton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
D.R. Horton belongs to the Zacks Building Products - Home Builders industry. Another stock from the same industry, KB Home (KBH - Free Report) , has gained 6.2% over the past month. More than a month has passed since the company reported results for the quarter ended November 2023.
KB Home reported revenues of $1.67 billion in the last reported quarter, representing a year-over-year change of -13.7%. EPS of $1.85 for the same period compares with $2.47 a year ago.
For the current quarter, KB Home is expected to post earnings of $1.56 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for KB Home. Also, the stock has a VGM Score of A.
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Why Is D.R. Horton (DHI) Up 3.4% Since Last Earnings Report?
It has been about a month since the last earnings report for D.R. Horton (DHI - Free Report) . Shares have added about 3.4% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is D.R. Horton due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
D.R. Horton Q1 Earnings Miss, Orders Rise
D.R. Horton reported first-quarter fiscal 2024 (ended Dec 31, 2023) results, wherein earnings missed the Zacks Consensus Estimate, but revenues surpassed the same.
On a year-over-year basis, both the top and bottom lines increased. The upside was backed by the supply of both new and existing homes as affordable price points remain limited, and robust housing demand supported by favorable demographics amid elevated inflation and mortgage/interest rates.
Earnings, Revenues & Margin Discussion
DHI reported adjusted earnings of $2.82 per share for the fiscal first quarter, which missed the Zacks Consensus Estimate of $2.88 by 2.1% but improved 2% from the year-ago figure of $2.76.
Total revenues (Homebuilding, Forestar, Rental and Financial Services) came in at $7.73 billion, up 6.5% year over year. The reported figure topped the consensus mark of $7.72 billion by 1.4%.
The consolidated pre-tax margin came in at 16.1% for the quarter.
Segment Details
Homebuilding revenues of $7.3 billion increased 8.2% from the prior-year quarter. Home sales were $7.28 billion, up 8.5% from a year ago period. Home closings rose 11.5% from the prior year’s quarter to 19,340 homes.
Net sales orders were up 35% year over year to 18,069 homes. The value of net orders also increased 38.7% year over year to $6.8 billion. The cancellation rate (on gross sales orders) was 19%, down from 27% a year ago.
Order backlog of homes at the end of the fiscal first quarter was 13,965 homes, down 11.4% year over year. Moreover, the value of the backlog was down 12.5% from the prior year to $5.4 billion.
Financial Services’ revenues decreased 40.6% from the year-ago level to $192.6 million.
Forestar contributed $305.9 million to total quarterly revenues with 3,150 lots sold, indicating growth from $216.7 million in revenues generated a year ago on 2,263 lots sold.
The Rental business generated revenues of $195.3 million for the quarter compared with $216.7 million a year ago.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.34 billion as of Dec 31, 2023 compared with $3.9 billion at the end of fiscal 2023. It had $3.1 billion of available capacity on the revolving credit facility at the end of 2023. Total homebuilding liquidity was $6.4 billion.
At the end of December 2023, DHI had 42,600 homes in inventory, of which 28,000 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 607,200 lots at the end of the first fiscal quarter. Of these, 24% were owned and 76% were controlled through land and lot purchase contracts.
At the end of first-quarter fiscal 2024, debt totaled $5.3 billion, with a debt to total capital of 18.6%. The trailing 12-month return on equity was 21.8%.
D.R. Horton repurchased 3.3 million shares of common stock for $398.3 million during the fiscal first quarter. In October 2023, its board authorized $1.5 billion shares of common stock, replacing the previous authorization ($32.8 million remaining of $234.0 million at the time of authorization due to repurchases made subsequent to year-end). The remaining stock repurchase authorization on Dec 31, 2023, was $1.3 billion.
Fiscal 2024 Views Updated
DHI raised the upper limit of its previously expected consolidated revenues by $0.3 billion to $36-$37.3 billion range. Homes closed are now anticipated within 87,000-90,000 units from the previously projected 86,000-89,000 units. The income tax rate is expected to be nearly 24%.
Fiscal 2024 cash flow from homebuilding operations is expected to be nearly $3 billion. Share repurchases are projected at approximately $1.5 billion.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
VGM Scores
At this time, D.R. Horton has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, D.R. Horton has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
D.R. Horton belongs to the Zacks Building Products - Home Builders industry. Another stock from the same industry, KB Home (KBH - Free Report) , has gained 6.2% over the past month. More than a month has passed since the company reported results for the quarter ended November 2023.
KB Home reported revenues of $1.67 billion in the last reported quarter, representing a year-over-year change of -13.7%. EPS of $1.85 for the same period compares with $2.47 a year ago.
For the current quarter, KB Home is expected to post earnings of $1.56 per share, indicating a change of +7.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.1% over the last 30 days.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #2 (Buy) for KB Home. Also, the stock has a VGM Score of A.