Housing

Investors Lukewarm on DR Horton Earnings

Paul Ausick

Published: January 25, 2016 10:10 am

Last Updated: January 13, 2020 2:38 pm

D.R. Horton Inc. (NYSE: DHI) reported first-quarter fiscal 2016 results before markets opened Monday. The homebuilder posted quarterly diluted earnings per share (EPS) of $0.42 on revenues of $2.36 billion. In the same period a year ago, the company reported EPS of $0.39 on revenue of $2.25 billion. First-quarter results also compare to the Thomson Reuters consensus estimates for EPS of $0.41 and $2.4 billion in revenue.

Home sales closed rose from 7,973 in the first quarter of 2015 to 8,061. Horton’s sales order backlog grew from 9,285 a year ago to 10,665 (up 15%) with a total value of $3.2 billion, up 16% compared with the year-ago quarter.

Horton’s cancellation rate (cancelled sales orders divided by gross sales orders) for the first quarter of fiscal 2016 was 23%, down year over year from 24%.

Revenue from home sales for the quarter rose by 5.0%, while the cost of sales rose about 4.3%.

Chairman Donald R. Horton said:

Solid performance in our three core brands is enabling us to capitalize on market opportunities and expand our industry-leading market share. With a sales backlog of 10,665 homes at the end of December, positive sales trends in January and a robust lot supply and inventory of homes available for sale, we are well-positioned for the spring selling season and fiscal 2016. We remain focused on growing our revenues and pre-tax profits at a double-digit annual pace, while generating positive cash flows and improved returns.

Other than that statement, Horton did not offer guidance. The consensus estimates for the second quarter of the company’s 2016 fiscal year call for EPS of $0.48 on revenues of $2.68 billion. For the full year, analysts expect EPS of $2.33 on revenues of $12.06 billion.

Investors are viewing the backlog and narrow gap between homebuilding revenues and costs with a wary eye.

Shares traded down nearly 3% early Monday morning, at $26.90 in a 52-week range of $23.74 to $33.10. Thomson Reuters had a consensus analyst price target of around $33.03 before the results were announced.