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Why Is D.R. Horton (DHI) Down 13.7% 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 lost about 13.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is D.R. Horton due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
D.R. Horton Q1 Earnings & Revenue Beat
D.R. Horton reported first-quarter fiscal 2025 (ended Dec. 31, 2024) results, with earnings and revenues beating Zacks Consensus Estimate but decreasing on a year-over-year basis.
Despite rising home inventories, the supply of affordable homes remains constrained, while favorable demographics continue to drive housing demand. To address affordability challenges and stimulate sales, the company leveraged incentives such as mortgage rate buydowns. Additionally, D.R. Horton focused on offering smaller, affordable floor plans to align with the needs of cost-conscious homebuyers.
The company’s strong liquidity, low leverage, and national scale provided significant operational and financial flexibility. Its disciplined approach to capital allocation, combined with its flexible lot supply and affordable product offerings, positioned D.R. Horton to maximize returns across its communities while adapting to evolving market conditions.
Earnings, Revenues & Margin Discussion
DHI reported adjusted earnings of $2.61 per share in the fiscal first quarter, which beat the Zacks Consensus Estimate of $2.40 by 8.8% but declined 7.4% from the year-ago figure of $2.82.
Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $7.6 billion, down 1.5% year over year. The reported figure, however, came above the analysts’ expectation of $7.13 billion.
The consolidated pre-tax profit margin was 14.6% in the quarter under review, down from 16.1% a year ago.
Segment Details of D.R. Horton
Homebuilding revenues of $7.17 billion decreased 1.8% from the prior-year quarter. Home sales were $7.15 billion, down 1.8% from the year-ago period. Home closings were down 1% from the prior-year quarter to 19,059 homes.
Net sales orders were down 1% year over year to 17,837 homes. The value of net orders decreased 2% year over year to $6.7 billion from $6.8 billion. The cancelation rate (on gross sales orders) was 18%, an improvement from 19% a year ago.
Order backlog of homes at the end of the fiscal first quarter was 11,003 homes, down 21% year over year. Moreover, the value of the backlog was down 21% from the prior-year period to $4.3 billion.
Financial Services revenues decreased 5.3% from the year-ago level to $182.3 million.
Forestar contributed $250.4 million to total quarterly revenues with 2,333 lots sold, indicating a decline from $305.9 million in revenues generated a year ago on 3,150 lots sold.
The Rental business generated revenues of $217.8 million for the quarter, up from $195.3 million a year ago.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.07 billion as of Dec. 31, 2024, compared with $4.54 billion at the end of fiscal 2024. It had $3 billion of available capacity on the revolving credit facility on Dec. 31, 2024. Total liquidity was $6.5 billion.
At the end of December 2024, DHI had 36,200 homes in inventory, of which 25,700 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 639,800 lots at the end of the fiscal first quarter. Of these, 24% were owned and 76% were controlled through land and lot purchase contracts.
At the end of the fiscal first quarter, debt totaled $5.1 billion, with a debt to total capital of 17%. The trailing 12-month return on equity was 19.1%.
D.R. Horton repurchased 6.8 million shares of common stock for $1.1 billion in the fiscal first quarter. As of Dec. 31, 2024, the company's remaining stock repurchase authorization was $2.5 billion.
DHI’s Fiscal 2025 Guidance
DHI expects consolidated revenues in the range of $36-$37.5 billion compared with $36.8 billion in fiscal 2023. Homes closed are anticipated to be within 90,000-92,000 units. The income tax rate is expected to be 24%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -14.28% due to these changes.
VGM Scores
Currently, D.R. Horton has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. 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. It's no surprise D.R. Horton has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Why Is D.R. Horton (DHI) Down 13.7% Since Last Earnings Report?
It has been about a month since the last earnings report for D.R. Horton (DHI - Free Report) . Shares have lost about 13.7% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is D.R. Horton due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
D.R. Horton Q1 Earnings & Revenue Beat
D.R. Horton reported first-quarter fiscal 2025 (ended Dec. 31, 2024) results, with earnings and revenues beating Zacks Consensus Estimate but decreasing on a year-over-year basis.
Despite rising home inventories, the supply of affordable homes remains constrained, while favorable demographics continue to drive housing demand. To address affordability challenges and stimulate sales, the company leveraged incentives such as mortgage rate buydowns. Additionally, D.R. Horton focused on offering smaller, affordable floor plans to align with the needs of cost-conscious homebuyers.
The company’s strong liquidity, low leverage, and national scale provided significant operational and financial flexibility. Its disciplined approach to capital allocation, combined with its flexible lot supply and affordable product offerings, positioned D.R. Horton to maximize returns across its communities while adapting to evolving market conditions.
Earnings, Revenues & Margin Discussion
DHI reported adjusted earnings of $2.61 per share in the fiscal first quarter, which beat the Zacks Consensus Estimate of $2.40 by 8.8% but declined 7.4% from the year-ago figure of $2.82.
Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $7.6 billion, down 1.5% year over year. The reported figure, however, came above the analysts’ expectation of $7.13 billion.
The consolidated pre-tax profit margin was 14.6% in the quarter under review, down from 16.1% a year ago.
Segment Details of D.R. Horton
Homebuilding revenues of $7.17 billion decreased 1.8% from the prior-year quarter. Home sales were $7.15 billion, down 1.8% from the year-ago period. Home closings were down 1% from the prior-year quarter to 19,059 homes.
Net sales orders were down 1% year over year to 17,837 homes. The value of net orders decreased 2% year over year to $6.7 billion from $6.8 billion. The cancelation rate (on gross sales orders) was 18%, an improvement from 19% a year ago.
Order backlog of homes at the end of the fiscal first quarter was 11,003 homes, down 21% year over year. Moreover, the value of the backlog was down 21% from the prior-year period to $4.3 billion.
Financial Services revenues decreased 5.3% from the year-ago level to $182.3 million.
Forestar contributed $250.4 million to total quarterly revenues with 2,333 lots sold, indicating a decline from $305.9 million in revenues generated a year ago on 3,150 lots sold.
The Rental business generated revenues of $217.8 million for the quarter, up from $195.3 million a year ago.
Balance Sheet Details
D.R. Horton’s cash, cash equivalents and restricted cash totaled $3.07 billion as of Dec. 31, 2024, compared with $4.54 billion at the end of fiscal 2024. It had $3 billion of available capacity on the revolving credit facility on Dec. 31, 2024. Total liquidity was $6.5 billion.
At the end of December 2024, DHI had 36,200 homes in inventory, of which 25,700 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 639,800 lots at the end of the fiscal first quarter. Of these, 24% were owned and 76% were controlled through land and lot purchase contracts.
At the end of the fiscal first quarter, debt totaled $5.1 billion, with a debt to total capital of 17%. The trailing 12-month return on equity was 19.1%.
D.R. Horton repurchased 6.8 million shares of common stock for $1.1 billion in the fiscal first quarter. As of Dec. 31, 2024, the company's remaining stock repurchase authorization was $2.5 billion.
DHI’s Fiscal 2025 Guidance
DHI expects consolidated revenues in the range of $36-$37.5 billion compared with $36.8 billion in fiscal 2023. Homes closed are anticipated to be within 90,000-92,000 units. The income tax rate is expected to be 24%.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended downward during the past month.
The consensus estimate has shifted -14.28% due to these changes.
VGM Scores
Currently, D.R. Horton has a subpar Growth Score of D, a grade with the same score on the momentum front. However, 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 C. 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. It's no surprise D.R. Horton has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.