Dr. Horton (DHI) handily beat estimates for profit and revenue for the second quarter early Thursday, giving upbeat guidance on revenue for the full year. DHI stock emerged in pre-market trading, and is poised to jump out of the buying range if gains hold in the regular session.
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DR Horton’s earnings are a free test for the sector, with the rebounding housing market in the spotlight.
In an earnings release, the leading homebuilder said, “The spring selling season is off to an encouraging start.” He added that demand improved during the quarter due to “normal seasonal factors” despite higher mortgage rates and inflationary pressures.
Dr. Horton’s earnings
estimatesAnalysts polled by FactSet expect Dr. Horton’s earnings to fall 52% year-over-year to $1.93 per share. Revenue saw a 19% decline to $6.452 billion.
results: DR Horton’s earnings fell 32% to $2.73 per diluted share, destroying estimates. Revenue of $7.973 billion came in roughly even with where it was about a year ago and well ahead of the number of views.
The company said in its earnings release that homes that closed in the quarter fell 1%, to 19,664, compared to the same quarter a year ago. Net sales orders grew 73% sequentially from the first quarter.
prospects: The company guided full-year revenue of $31.5 billion to $33 billion, above FactSet’s consensus estimate of $28.41 billion. Ahead of Thursday’s results, analysts had expected full-year earnings per share of $9.17, down 44%.
“Although high interest rates and economic uncertainty may persist for some time, the supply of affordable new and existing homes remains limited,” Chairman Donald Horton said in Thursday’s earnings release.
He added, “The demographics that support the demand for housing are still favorable.”
DHI ready to exit the buying range
Shares of DR Horton jumped 5% to 107 in early stock market trading today. DHI stock topped the 99.09 cup handle buy point in March. Buy range reaches 104.04.
Meritage Homes (MTH) was not yet active on Thursday. Shares fell 0.9 percent to 125.78 on Wednesday. MTH stock, a IBD Leaderboard Member, achieved the highest level in a decade on Tuesday after a sharp rise since last October.
Other shares of housing construction – incl KB major (KBH), Linar (flexible) And Bulletgroup (PHM) – Wed was hardly mixed. KBH, Lennar, and Pulte stocks are in buy areas.
As DR Horton begins homebuilding earnings, Meritage and Lennar will report next week.
Housing market recovery
Experts say mortgage rates have fallen from their peak in October 2022, driving up housing demand and sales. Homebuilders’ earnings are set to struggle for at least a few quarters, but housing stocks have raced ahead.
Single-family housing starts in the United States increased for the second consecutive month in March, but single-family permits for future construction rose strongly.
Home prices have risen sharply over the past two years, which has helped fuel stocks of homebuilders. Demand for housing exceeded supply due to shortages of materials and labour.
Dr. Horton is engaged in the construction and sale of single-family homes. It claims to be the largest homebuilder by volume in the United States since 2002.
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