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In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 2.1%, but revenues beat the same by 1.4%, respectively. Yet, earnings and revenues of this homebuilding company grew 2% and 6.5% from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in 19 of the last 20 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has remained unchanged at $3.09 over the past 30 days. The estimated figure indicates a 13.2% increase from the year-ago EPS of $2.73. The consensus mark for revenues is $8.27 billion, suggesting 3.7% year-over-year growth.
D.R. Horton’s Homebuilding revenues are expected to have improved in the fiscal second quarter from the year-ago level owing to a higher number of 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 $8.1-$8.3 billion for the fiscal second quarter (compared with $7.97 billion a year ago). Homes closed are anticipated to be within 20,000-20,500 units.
Our model predicts Homebuilding revenues to grow 2.7% year over year to $7.67 billion in the to-be-reported quarter. The metric has improved from $7.3 billion reported in the prior quarter. The average selling price of homes closed is expected to be down 0.03% year over year to $378,700 in the fiscal second quarter. Homes closed are expected to be 20,216 units, up 2.8% year over year and 4.5% sequentially.
We expect Financial Services revenues of $205.9 million, which suggests a decline of 4.8% from the year-ago level of $216.4 million.
We expect Rental Property revenues of $337.4 million, which suggests growth of 50.5% from the year-ago level of $224.1 million.
Other Projections
Meanwhile, higher land, labor and material costs are expected to have reflected in the fiscal second-quarter margins. The tight labor market is a concern. DHI expects the home sales gross margin for the fiscal second quarter to be in the range of 22.6-23.1%. Our model predicts home sales gross margins to be 23% in the fiscal second quarter, depicting an improvement from 21.6% in the prior-year quarter.
DHI expects homebuilding SG&A, as a percentage of revenues, between 7.5% and 7.7% (versus 7.3% reported a year ago). Financial Services pretax profit margin is likely to be in the range of 30-35%, and the income tax rate is expected to be 23.5-24% in the quarter. We expect homebuilding SG&A to be 7.6% of homebuilding revenues and Financial Services pretax profit margin to be 34.5% for the quarter.
Our model predicts net sales orders to increase 0.5% year over year to 23,249 units. The same for backlog is currently pegged at 16,998 units, which suggests a decrease from 19,237 units reported a year ago. Our model predicts the value of the backlog to be $6.55 billion, implying a decline from $7.4 billion in the corresponding fiscal 2023 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. This 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: 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.
DFH’s earnings topped the consensus mark in all the last four quarters, with the average being 144.9%. Earnings for the to-be-reported quarter are expected to grow 21.4% year over year.
Eagle Materials Inc. (EXP - Free Report) has an Earnings ESP of +1.95% and carries a Zacks Rank #2.
EXP’s earnings beat the consensus mark in all the last four quarters, the average surprise being 6.5%. Earnings for the to-be-reported quarter are expected to decline 0.7% year over year.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +3.01% and carries a Zacks Rank #3.
PWR’s earnings surpassed the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 4.9%. Earnings for the to-be-reported quarter are expected to increase 3.2% year over year.
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D.R. Horton (DHI) to Report Q2 Earnings: What's in Store?
D.R. Horton Inc. (DHI - Free Report) is slated to report second-quarter fiscal 2024 (ended Mar 31, 2024) results on Apr 18, before the opening bell.
In the last reported quarter, the company’s earnings missed the Zacks Consensus Estimate by 2.1%, but revenues beat the same by 1.4%, respectively. Yet, earnings and revenues of this homebuilding company grew 2% and 6.5% from the year-ago reported figures.
Markedly, D.R. Horton reported better-than-expected earnings in 19 of the last 20 quarters.
The Trend in Estimate Revision
The Zacks Consensus Estimate for the to-be-reported quarter’s earnings per share (EPS) has remained unchanged at $3.09 over the past 30 days. The estimated figure indicates a 13.2% increase from the year-ago EPS of $2.73. The consensus mark for revenues is $8.27 billion, suggesting 3.7% 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 second quarter from the year-ago level owing to a higher number of 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 $8.1-$8.3 billion for the fiscal second quarter (compared with $7.97 billion a year ago). Homes closed are anticipated to be within 20,000-20,500 units.
Our model predicts Homebuilding revenues to grow 2.7% year over year to $7.67 billion in the to-be-reported quarter. The metric has improved from $7.3 billion reported in the prior quarter. The average selling price of homes closed is expected to be down 0.03% year over year to $378,700 in the fiscal second quarter. Homes closed are expected to be 20,216 units, up 2.8% year over year and 4.5% sequentially.
We expect Financial Services revenues of $205.9 million, which suggests a decline of 4.8% from the year-ago level of $216.4 million.
We expect Rental Property revenues of $337.4 million, which suggests growth of 50.5% from the year-ago level of $224.1 million.
Other Projections
Meanwhile, higher land, labor and material costs are expected to have reflected in the fiscal second-quarter margins. The tight labor market is a concern. DHI expects the home sales gross margin for the fiscal second quarter to be in the range of 22.6-23.1%. Our model predicts home sales gross margins to be 23% in the fiscal second quarter, depicting an improvement from 21.6% in the prior-year quarter.
DHI expects homebuilding SG&A, as a percentage of revenues, between 7.5% and 7.7% (versus 7.3% reported a year ago). Financial Services pretax profit margin is likely to be in the range of 30-35%, and the income tax rate is expected to be 23.5-24% in the quarter. We expect homebuilding SG&A to be 7.6% of homebuilding revenues and Financial Services pretax profit margin to be 34.5% for the quarter.
Our model predicts net sales orders to increase 0.5% year over year to 23,249 units. The same for backlog is currently pegged at 16,998 units, which suggests a decrease from 19,237 units reported a year ago. Our model predicts the value of the backlog to be $6.55 billion, implying a decline from $7.4 billion in the corresponding fiscal 2023 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. This 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: 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.
Dream Finders Homes (DFH - Free Report) has an Earnings ESP of +7.14% and sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
DFH’s earnings topped the consensus mark in all the last four quarters, with the average being 144.9%. Earnings for the to-be-reported quarter are expected to grow 21.4% year over year.
Eagle Materials Inc. (EXP - Free Report) has an Earnings ESP of +1.95% and carries a Zacks Rank #2.
EXP’s earnings beat the consensus mark in all the last four quarters, the average surprise being 6.5%. Earnings for the to-be-reported quarter are expected to decline 0.7% year over year.
Quanta Services, Inc. (PWR - Free Report) has an Earnings ESP of +3.01% and carries a Zacks Rank #3.
PWR’s earnings surpassed the consensus mark in three of the last four quarters and missed on one occasion, the average surprise being 4.9%. Earnings for the to-be-reported quarter are expected to increase 3.2% year over year.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.