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D.R. Horton (DHI) Shares Rise on Q3 Earnings & Revenue Beat

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D.R. Horton, Inc.’s (DHI - Free Report) shares climbed 2% after it reported third-quarter fiscal 2020 results, wherein earnings and revenues handily beat the respective Zacks Consensus Estimate.

Its industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands supported the upside. The company’s initiatives in sync with changing market conditions resulted in net sales order increase in excess of 50% in both May and June from the comparable months of the prior year.

Earnings & Revenue Discussion

D.R. Horton reported quarterly adjusted earnings of $1.72 per share, which surpassed the Zacks Consensus Estimate of $1.27 by 35.4% and increased 36.5% from the year-ago period.

Total revenues (Homebuilding, Forestar and Financial Services) came in at $5.39 billion, up 9.9% year over year. The reported figure also beat the consensus mark of $5.04 billion.

D.R. Horton, Inc. Price, Consensus and EPS Surprise

D.R. Horton, Inc. Price, Consensus and EPS Surprise

D.R. Horton, Inc. price-consensus-eps-surprise-chart | D.R. Horton, Inc. Quote

Home Closings and Orders

Homebuilding revenues of $5.22 billion increased 9.7% from the prior-year quarter. Home sales also increased 10% year over year to $5.21 billion, aided by higher home deliveries. However, land/lot sales and other revenues were $14.5 million, down from $27.5 million a year ago.

Home closings increased 10% from the prior-year quarter to 17,642 homes and 10% in value to $5.21 billion. It recorded growth across all regions comprising East, Midwest, Southeast, and South Central, barring Southwest and West.

Quarterly net sales orders increased 38% year over year to 21,519 homes. It registered growth in all geographic regions served. Value of net orders also improved 35% year over year to $6.3 billion. The cancellation rate was 22%, higher than 20% a year ago.

Order backlog of homes at quarter-end was 23,205 homes, up 41% year over year. The value of backlogs was also up 41% from the prior year to $7 billion.

Revenues from the Financial Services segment increased 30.9% from the year-ago level to $156.6 million.

Forestar contributed $177.9 million to its total quarterly revenues, reflecting a notable improvement from $88.2 million a year ago.

Margins

The company’s consolidated pre-tax margin expanded 170 basis points to 14.5%.

Balance Sheet Details

D.R. Horton’s cash, cash equivalents and restricted cash totaled $2.35 billion as of Jun 30, 2020 compared with $1.49 billion at fiscal 2019-end.

At the end of the reported quarter, it had $1.9 billion of unrestricted homebuilding cash and $1.8 billion of available capacity. Total homebuilding liquidity was $3.7 billion.

As of Jun 30, 2020, homebuilding debt totaled $2.5 billion, with $400 million of senior note maturities in the next 12 months.

As of Jun 30, 2020, its homebuilding debt to total capital was 18.4%. The trailing 12-month return on equity was 19.9%.

D.R. Horton repurchased 7 million shares of common stock for $360.4 million during the first nine months of fiscal 2020. The company’s remaining stock repurchase authorization — which has no expiration date — as of Jun 30, 2020 was $535.3 million.

Zacks Rank

Currently, D.R. Horton carries a Zacks Rank #1 (Strong Buy).

You can see the complete list of today’s Zacks #1 Rank stocks here.

Peer Releases

PulteGroup Inc. (PHM - Free Report) — a Zacks Rank #1 stock — reported second-quarter 2020 results, wherein earnings and revenues handily surpassed the Zacks Consensus Estimate, buoyed by a recovery in demand.

NVR, Inc. (NVR - Free Report) — also a Zacks Rank #1 stock — delivered a lackluster performance in second-quarter 2020, wherein both earnings and homebuilding revenues lagged the Zacks Consensus Estimate and declined year over year.

KB Home (KBH - Free Report) — currently carrying a Zacks Rank #3 (Hold) — reported lackluster results for second-quarter fiscal 2020 (ended May 31, 2020), wherein earnings and revenues lagged the respective Zacks Consensus Estimate. On a year-over-year basis, its bottom line increased while top line declined on lower deliveries and average selling price.

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