The U.S. housing market has been in down trend for the last couple years. Despite industry headwinds, D.R. Horton, Inc. (NYSE:DHI) has managed to report strong new orders. The stock price has been rallying all year as a result:
Will management continue to deliver?
D.R. Horton is scheduled to report Q4 earnings results pre-market on November 12, 2019. The company is expected to report earnings of $1.25/share on revenue of $4.846 billion.
| Metric | Expected | Prior Year | YoY Change |
|---|---|---|---|
| Revenue | $4,846.50 | $4,505.20 | 7.6% |
| EPS | $1.25 | $1.22 | 2.5% |
The consensus earnings per share (EPS) of $1.25/share is based on a poll of 15 analysts and represents a growth of 2.5% over the same quarter last year when the company reported earnings of $1.22/share.
The revenue forecast of $4.846 billion based on a poll of 11 analysts implies a year-over-year (YoY) growth of 7.6%. Last year the company reported $4.505 billion in revenue for the quarter.
Earnings Call Trends
Historically, management has exceeded analyst expectations 6 out of the last 8 tracked quarters, and met expectations 2 quarters.
What are your expectations from D.R. Horton for this earnings this quarter? Let us know in the comments!
| Quarter | Expected | Reported | Surprise | Result |
|---|---|---|---|---|
| Q3, 2019 | $1.04 | $1.26 | 21.0% | Beat |
| Q2, 2019 | $0.86 | $0.93 | 8.1% | Beat |
| Q1, 2019 | $0.76 | $0.76 | 0.0% | Meet |
| Q4, 2018 | $1.22 | $1.22 | 0.0% | Meet |
| Q3, 2018 | $1.07 | $1.18 | 10.3% | Beat |
| Q2, 2018 | $0.86 | $0.91 | 5.8% | Beat |
| Q1, 2018 | $0.65 | $0.78 | 19.4% | Beat |
| Q4, 2017 | $0.81 | $0.82 | 1.2% | Beat |
One question we always consider here at the Bankers’ Tribune is how important are earnings reports to D.R. Horton’s stock price performance? It’s more important for some companies than for others. In the following table, we summarize the company’s stock price movements after earnings releases. The “Price Day Prior” column shows the closing stock price on the day before the earnings report, and the “Price Next Day” column shows the stock price at the end of the trading day after the earnings report. After the last earnings report for the period ending June 30, 2019, the stock price reacted by increasing by 4.4%.
| Report Date | Price Day Prior | Price Next Day | Change % | Result |
|---|---|---|---|---|
| 2019-07-30 | $44 | $45.93 | 4.4% | Increase |
| 2019-04-25 | $46.67 | $44 | -5.7% | Decline |
| 2019-01-25 | $38.30 | $37.30 | -2.6% | Decline |
| 2018-11-08 | $37.59 | $34.40 | -8.5% | Decline |
Fundamentals And Technical Analysis
D.R. Horton is currently trading at $52.65/share, up 2.9% for the day ahead of earnings. The company is trading at approximately 96.7% of its 52 week high of $54.42/share. The company’s stock price is up 19.7% since the last earnings report and down -4.0% over the previous week. The company’s 14 Day Relative Price Index (RSI) of 43.29 suggests the company is trading in technically neutral territory. The RSI is considered overbought when above 70 and oversold when below 30.
The current share price implies a price-to-earnings (P/E) multiple of 11.9x and a forward P/E multiple of 12.0x. D.R. Horton’s current share price also implies a price-to-book (P/B) multiple of 2.0x. The following table summarizes some other key fundamental ratios:
| Metric | Value |
|---|---|
| Last Fiscal Period | FY2019.Q3 |
| Period End Date | June 30, 2019 |
| Stock Price (Current) | $52.65 |
| P/E Ratio | 11.9x |
| P/E Ratio (Fwd) | 12.0x |
| PEG Ratio | 1.7 |
| Total Debt to Capital (%) | 15.3% |
| Levered Free Cash Flow | $129.6 million |
| Enterprise Value / EBITDA | 10.4x |
Company Profile: D.R. Horton, Inc.
D.R. Horton, Inc. is a large-cap stock with a market capitalization of $18.916 billion and a total enterprise value of $21.720 billion. The company operates in the Consumer Discretionary sector and Household Durables industry.
D.R. Horton, Inc. operates as a homebuilding company in East, Midwest, Southeast, South Central, Southwest, and West regions in the United States. It engages in the acquisition and development of land; and construction and sale of homes in 27 states and 81 markets in the United States under the names of D.R. Horton, America’s Builder, Express Homes, Emerald Homes, Freedom Homes, and Pacific Ridge Homes.
The company constructs and sells single-family detached homes; and attached homes, such as town homes, duplexes, and triplexes. It is also involved in the origination and sale of mortgages; and provision of title insurance policies, and examination and closing services, as well as engages in the residential lot development business. The company primarily serves homebuyers.
D.R. Horton, Inc. was founded in 1978 and is based in Arlington, Texas.
