We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Slower Margin Recovery to Ail D.R. Horton (DHI) Q3 Earnings
Read MoreHide Full Article
D.R. Horton Inc. (DHI - Free Report) is scheduled to report third-quarter fiscal 2019 results on Jul 30, before the opening bell. In the last reported quarter, earnings came in at 93 cents per share, surpassing the Zacks Consensus Estimate of 86 cents by 8.1%. D.R. Horton surpassed earnings estimates in two of the last four quarters, with the average positive surprise being 3.5%.
This leading homebuilder’s fiscal second-quarter earnings and revenues increased 2% and 9%, respectively. Factors like declining mortgage rates, moderate home prices, industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands helped D.R. Horton post improved results.
How are Estimates Faring?
Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.
The Zacks Consensus Estimate for the to-be-reported quarter is currently pegged at $1.06, remaining unchanged over the past 60 days. This indicates a decrease of 10.2% from the year-ago earnings of $1.18 per share. That said, revenues are expected to be $4.51 billion, suggesting a 2.1% year-over-year improvement.
Although declining mortgage rates and lower housing prices have been driving traffic after a torrid second-half 2018, the conversion of that traffic to sign purchase contracts slowed. Softness in homebuying demand, in response to affordability challenges and general market uncertainty, has been impacting its deliveries, order flow and backlog. These headwinds are expected to affect its fiscal third-quarter results.
That said, since the beginning of calendar year 2019, the U.S. housing market has been regaining strength courtesy of declining mortgage rates and moderating home prices. Favorable job market and economic conditions are expected to provide some support in mitigating the headwinds in the quarter to be reported.
For the fiscal third quarter, the company expects consolidated revenues in the range of $4.4-$4.6 billion (compared with $4.42 billion recorded a year ago) and homes closed within 14,500-15,000 (versus 14,114 units closed in the year-ago period).
Overall, the consensus estimate for Homebuilding revenues (accounting for more than 96.8% of revenues) of $4.33 billion suggests an increase from $4.27 billion recorded a year ago.
Meanwhile, D.R. Horton’s earnings are expected to decline year over year in the fiscal third quarter despite higher revenues, mainly due to increased costs, reduced pricing power, higher incentives on sales activity and the impact of purchase accounting. Rising land/labor and material costs, as well as competitive pricing pressure have been compressing its margins, which will likely impact the upcoming results.
For the fiscal third quarter, the company expects gross margin in the range of 19.3-19.8% (compared with 21.9% in the year-ago period) due to the above-mentioned headwinds. This will result in a lower consolidated pre-tax profit margin in the quarter.
What the Zacks Model Says
Our proven model does not clearly show that D.R. Horton is likely to beat estimates in the quarter to be reported. This 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.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: D.R. Horton has an Earnings ESP of +5.54%.
Zacks Rank: It currently carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks Worth a Look
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 in their respective quarters to be reported.
Rayonier Inc. (RYN - Free Report) has an Earnings ESP of +19.15% and carries a Zacks Rank #3.
Jacobs Engineering Group Inc. has an Earnings ESP of +1.60% and a Zacks Rank #3.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
Image: Bigstock
Slower Margin Recovery to Ail D.R. Horton (DHI) Q3 Earnings
D.R. Horton Inc. (DHI - Free Report) is scheduled to report third-quarter fiscal 2019 results on Jul 30, before the opening bell. In the last reported quarter, earnings came in at 93 cents per share, surpassing the Zacks Consensus Estimate of 86 cents by 8.1%. D.R. Horton surpassed earnings estimates in two of the last four quarters, with the average positive surprise being 3.5%.
This leading homebuilder’s fiscal second-quarter earnings and revenues increased 2% and 9%, respectively. Factors like declining mortgage rates, moderate home prices, industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands helped D.R. Horton post improved results.
How are Estimates Faring?
Let’s take a look at the estimate revision trend in order to get a clear picture of what analysts are thinking about the company prior to the earnings release.
The Zacks Consensus Estimate for the to-be-reported quarter is currently pegged at $1.06, remaining unchanged over the past 60 days. This indicates a decrease of 10.2% from the year-ago earnings of $1.18 per share. That said, revenues are expected to be $4.51 billion, suggesting a 2.1% year-over-year improvement.
D.R. Horton, Inc. Price and EPS Surprise
D.R. Horton, Inc. price-eps-surprise | D.R. Horton, Inc. Quote
Factors at Play
Although declining mortgage rates and lower housing prices have been driving traffic after a torrid second-half 2018, the conversion of that traffic to sign purchase contracts slowed. Softness in homebuying demand, in response to affordability challenges and general market uncertainty, has been impacting its deliveries, order flow and backlog. These headwinds are expected to affect its fiscal third-quarter results.
That said, since the beginning of calendar year 2019, the U.S. housing market has been regaining strength courtesy of declining mortgage rates and moderating home prices. Favorable job market and economic conditions are expected to provide some support in mitigating the headwinds in the quarter to be reported.
For the fiscal third quarter, the company expects consolidated revenues in the range of $4.4-$4.6 billion (compared with $4.42 billion recorded a year ago) and homes closed within 14,500-15,000 (versus 14,114 units closed in the year-ago period).
Overall, the consensus estimate for Homebuilding revenues (accounting for more than 96.8% of revenues) of $4.33 billion suggests an increase from $4.27 billion recorded a year ago.
Meanwhile, D.R. Horton’s earnings are expected to decline year over year in the fiscal third quarter despite higher revenues, mainly due to increased costs, reduced pricing power, higher incentives on sales activity and the impact of purchase accounting. Rising land/labor and material costs, as well as competitive pricing pressure have been compressing its margins, which will likely impact the upcoming results.
For the fiscal third quarter, the company expects gross margin in the range of 19.3-19.8% (compared with 21.9% in the year-ago period) due to the above-mentioned headwinds. This will result in a lower consolidated pre-tax profit margin in the quarter.
What the Zacks Model Says
Our proven model does not clearly show that D.R. Horton is likely to beat estimates in the quarter to be reported. This 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.
You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Earnings ESP: D.R. Horton has an Earnings ESP of +5.54%.
Zacks Rank: It currently carries a Zacks Rank #4 (Sell). Note that we caution against stocks with a Zacks Rank #4 or 5 (Strong Sell) going into the earnings announcement, especially when the company is witnessing negative estimate revisions.
Stocks Worth a Look
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 in their respective quarters to be reported.
KBR, Inc. (KBR - Free Report) has an Earnings ESP of +1.16% and holds a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Rayonier Inc. (RYN - Free Report) has an Earnings ESP of +19.15% and carries a Zacks Rank #3.
Jacobs Engineering Group Inc. has an Earnings ESP of +1.60% and a Zacks Rank #3.
Biggest Tech Breakthrough in a Generation
Be among the early investors in the new type of device that experts say could impact society as much as the discovery of electricity. Current technology will soon be outdated and replaced by these new devices. In the process, it’s expected to create 22 million jobs and generate $12.3 trillion in activity.
A select few stocks could skyrocket the most as rollout accelerates for this new tech. Early investors could see gains similar to buying Microsoft in the 1990s. Zacks’ just-released special report reveals 7 stocks to watch. The report is only available for a limited time.
See 7 breakthrough stocks now>>