A month has gone by since the last earnings report for D.R. Horton (DHI Quick QuoteDHI - Free Report) . Shares have added about 0.1% in that time frame, underperforming 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 its most recent earnings report in order to get a better handle on the important catalysts.

D.R. Horton Q4 Earnings & Revenue Miss Estimates

D.R. Horton, Inc. reported fourth-quarter fiscal 2024 (ended Sept. 30, 2024) results, with earnings and revenues missing Zacks Consensus Estimate and decreasing on a year-over-year basis.

D.R. Horton’s quarterly performance fell short of expectations primarily due to a combination of high mortgage rates and buyer hesitancy. Although mortgage rates decreased from earlier peaks, many potential buyers delayed purchases, expecting rates to fall further in 2025. This rate of volatility and uncertainty contributed to a slowdown in buyer activity, with some remaining on the sidelines. The competitive market conditions and ongoing affordability challenges also impacted the pace of sales. As a result, while D.R. Horton’s sales were in line with seasonal trends, they did not reach the company's projected targets.

Nonetheless, D.R. Horton is well-positioned for fiscal 2025, benefiting from limited affordable home supply and favorable demographics driving demand. The company’s focus on affordable homes, an inventory of 37,400 homes, and improved construction efficiency provide a strong foundation. With expected growth in operating cash flow, robust liquidity, and low leverage, D.R. Horton has significant financial flexibility. This strong position led to a 33% increase in the quarterly dividend to 40 cents per share, with a continued focus on disciplined capital allocation to boost long-term shareholder value through dividends and share repurchases.

Earnings, Revenues & Margin Discussion

DHI reported adjusted earnings of $3.92 per share in the fiscal fourth quarter, which fell short of the Zacks Consensus Estimate of $4.20 by 6.7% and declined 11.9% from the year-ago figure of $4.45.

Total revenues (Homebuilding, Forestar, Rental and Financial Services) were $10 billion, down 4.8% year over year. The reported figure fell short of the analysts’ expectation of $10.2 billion.

The consolidated pre-tax profit margin came in at 17.1% in the quarter under review, down from 19.2% a year ago.

Segment Details of D.R. Horton

Homebuilding revenues of $8.95 billion increased 1.8% from the prior-year quarter. Home sales were $8.93 billion, up 1.7% from the year-ago period. Home closings rose 3% from the prior-year quarter to 23,647 homes.

Net sales orders inched up 0.5% year over year to 19,035 homes. The value of net orders decreased year over year to $7.15 billion from $7.25 billion. The cancelation rate (on gross sales orders) was 21%, unchanged from a year ago.

Order backlog of homes at the end of fiscal 2024 was 12,180 homes, down 20% year over year. Moreover, the value of the backlog was down 19% from the prior-year period to $4.8 billion.

Financial Services’ revenues increased 1.1% from the year-ago level to $222 million.

Forestar contributed $551.4 million to total quarterly revenues with 5,374 lots sold, indicating growth from $549.7 million in revenues generated a year ago on 4,986 lots sold.

The Rental business generated revenues of $704.8 million for the quarter, down from $1.39 billion a year ago.

Fiscal 2024 Highlights

Total revenues grew 4% to $36.8 billion, primarily led by an increase in home sales revenues (up 7% to $33.9 billion). Homes closed grew 8% to 89,690 homes from fiscal 2023.

In fiscal 2024, homebuilding pre-tax margin of 16.1% contracted 50 basis points from fiscal 2023. For the fiscal year, EPS rose 4% to $14.34.

Balance Sheet Details

D.R. Horton’s cash, cash equivalents and restricted cash totaled $4.54 billion as of Sept. 30, 2024, compared with $3.9 billion at the end of fiscal 2023. It had $3.1 billion of available capacity on the revolving credit facility on Sept. 30, 2024. Total liquidity was $7.6 billion.

At the end of September 2024, DHI had 37,400 homes in inventory, of which 25,700 were unsold. D.R. Horton’s homebuilding land and lot portfolio totaled 632,900 lots at the end of the fiscal 2024. Of these, 24% were owned and 76% were controlled through land and lot purchase contracts.

At the end of fiscal 2024, debt totaled $5.9 billion, with a debt to total capital of 18.9%. The trailing 12-month return on equity was 19.9%.

D.R. Horton repurchased 3.4 million shares of common stock for $561.2 million in the fiscal fourth quarter. As of Sept. 30, 2024, the company's remaining stock repurchase authorization was $3.6 billion.

DHI’s Fiscal 2025 Guidance

DHI now expects consolidated revenues in the range of $36-$37.5 billion compared with $36.8 billion in fiscal 2023. Homes closed are anticipated within 90,000-92,000 units. The income tax rate is expected to be 24.5%.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward during the past month.

The consensus estimate has shifted -18.81% due to these changes.

VGM Scores

At this time, D.R. Horton has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with an F. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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. 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.

Performance of an Industry Player

D.R. Horton belongs to the Zacks Building Products - Home Builders industry. Another stock from the same industry, NVR (NVR Quick QuoteNVR - Free Report) , has gained 1.2% over the past month. More than a month has passed since the company reported results for the quarter ended September 2024.

NVR reported revenues of $2.68 billion in the last reported quarter, representing a year-over-year change of +6.6%. EPS of $130.50 for the same period compares with $125.26 a year ago.

NVR is expected to post earnings of $127.20 per share for the current quarter, representing a year-over-year change of +4.6%. Over the last 30 days, the Zacks Consensus Estimate has changed -2.2%.

NVR has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.