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Dream Finders' (DFH) Stock Up on Q4 Earnings & Revenue Beat

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Dream Finders Homes, Inc. (DFH - Free Report) reported impressive results in fourth-quarter 2023, wherein earnings and revenues beat the Zacks Consensus Estimate. With this, the company’s earnings and revenues surpassed the consensus mark in each of the four consecutive quarters.

Also, the top and the bottom lines grew year over year.

The uptrend in the quarter’s result was attributable to increased average sales price (“ASP”), improved cycle times and favorable product mix. Although the home closings declined in the quarter, the strategic shift of the product mix toward higher-priced homes drove the top line. Furthermore, the company’s focus on direct cost reductions across its segments bodes well for the bottom line in the quarter.

Following the announcement, shares of this homebuilder notably grew 13.3% during the trading session on Feb 29.

Looking forward to 2024, the company is optimistic that the recently acquired Charleston-based company, Crescent Homes, will aid it in increasing home closings during the year. Also, the addition of three new markets in South Carolina and Tennessee, which increased the footprint to an aggregate of 20 markets, will offer meaningful home closings and earnings volume.

Earnings & Revenue Discussion

Dream Finders reported adjusted earnings per share (EPS) of $1, which topped the consensus estimate of 67 cents by 49.3%. In the year-ago period, the company reported an EPS of 78 cents.

Dream Finders Homes, Inc. Price, Consensus and EPS Surprise


Dream Finders Homes, Inc. Price, Consensus and EPS Surprise

Dream Finders Homes, Inc. price-consensus-eps-surprise-chart | Dream Finders Homes, Inc. Quote


Total revenues of $1.138 billion also beat the consensus mark of $835.1 million by 36.3% and grew 3.6% on a year-over-year basis.

Homebuilding Segment in Details

Homebuilding revenues of $1.135 billion increased 3% from the year-ago quarter’s levels. The number of homes delivered was 2,153 units, down 7% from the year-ago period’s levels. That said, home closing ASP increased 8.6% from a year ago to $520,940.

Dream Finders’ net orders inched down 0.1% to 1,106 units from 1,107 units in the prior year. The cancelation rate was 22.9%, down from 32.1% in the year-ago period.

Quarter-end backlog totaled 3,978 homes, sequentially down 20.8%. Further, potential housing revenues from backlog sequentially declined 20.8% to $1.89 billion.

The active community count at the end of fourth-quarter 2023 was 221, up from the year-ago period’s count of 206.

Homebuilding gross margin expanded 340 basis points (bps) year over year to 20.5%. The increase was primarily attributable to direct cost reductions across the company’s segments and to a lesser extent cycle time improvements, partially offset by higher financing and closing costs.

Selling, general and administrative expenses — as a percentage of homebuilding revenues — increased 150 bps from the year-ago figure to 8.3%.

2023 Highlights

Total revenues of Dream Finders in 2023 were $3.75 billion, up from $3.34 billion. Homebuilding revenues were $3.74 billion, up from $3.33 billion in 2022. Adjusted earnings in 2023 was $2.79 per share, up from $2.45 reported in 2022.

Total homes delivered were 7,314 units in 2023, up from 6,878 in 2022. Homebuilding gross margin was 19.4%, up 100 bps from 18.4% in 2022.

Financial Position

Dream Finders had cash and cash equivalents of $494.1 million as of Dec 31, 2023, up from $364.5 million in 2022 end. The company had a total liquidity of $828 million at 2023 end, up from $487 million in 2022 end.

As of the end of 2023, the net debt-to-capital ratio was 23.3%, down from 42.9% in 2022 end.

2024 Guidance

Dream Finders expects home closing to be approximately 8,250 units for the full year.

Zacks Rank & Recent Construction Releases

Dream Finders currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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