What You Need To Know Ahead of D.R. Horton's Earnings Report Thursday

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Aaron McDade
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Published April 12, 2024
D.R. Horton sign in a yard

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Key Takeaways

  • A number of homebuilders are set to report earnings this month, with D.R. Horton leading the way Thursday, giving investors a look at the state of the real estate market.
  • JPMorgan analysts wrote in a note in March that D.R. Horton told them sales had been "healthy" so far in the quarter, with stable pricing and not much buildup in housing inventory.
  • However, Wedbush Securities analysts recently downgraded several stocks in the homebuilding industry as it predicted seasonal declines in demand.
  • Along with the seasonal trends, Wedbush analysts noted persistently high mortgage rates could negatively impact homebuilders as their dependence on sales incentives to boost demand could become less effective if mortgage rates stay high.

Investors could get a look into the state of the real estate market with D.R. Horton (DHI) set to report earnings before the bell Thursday, with a number of other homebuilders to follow over the next few weeks.

After D.R. Horton’s second-quarter earnings report, several other companies in the industry, including Century Communities (CCS), Meritage Homes (MTH), and LGI Homes (LGIH), have quarterly earnings set to be released later in April, while Builders FirstSource (BLDR) is scheduled to report its first-quarter earnings May 7.

D.R. Horton is anticipated to post revenue of $8.26 billion for the quarter, up 3.7% from the same quarter a year ago, according to analyst estimates compiled by Visible Alpha. Adjusted net profit is expected to come in at just over $1.02 billion, for adjusted diluted earnings per share (EPS) of $3.07, equaling year-over-year increases of 8.5% and 12.3%, respectively.

  Estimates for Q2 FY 2024 Q1 FY 2024  Q2 FY 2023 
Revenue  $8.26 billion  $7.73 billion $7.97 billion
Adjusted Diluted EPS  $3.07 $2.82 $2.73
Adjusted Net Income  $1.02 billion $947.4 million $942.2 million
Source: Visible Alpha

After meeting with D.R. Horton executives last month, JPMorgan analysts wrote that the company felt sales had been "healthy" and "solid" so far this year, with stable pricing and no significant increases to the company's new home inventory.

However, Wedbush Securities analysts recently downgraded and lowered price targets for a number of homebuilder stocks as the firm predicted seasonal declines across the industry could hurt the stocks.

Along with seasonal trends, Wedbush analysts noted persistently high mortgage rates could negatively impact homebuilders as their dependence on sales incentives to boost demand could become less effective if mortgage rates stay high.

Wednesday's inflation report did little to dissuade investors of that notion, with consumer prices rising more than expected in March, diminishing the likelihood of interest rate cuts and falling mortgage rates in the near future.

Several stocks in the homebuilding industry, including D.R. Horton, Century Communities, Meritage, and LGI Homes, dropped in a range of nearly 5% to 6% in Wednesday afternoon trading after the release of the inflation data.

As of Friday’s close, D.R. Horton shares have gained about 1% since the start of the year. Meritage Homes shares have edged 0.4% higher, while Century Communities shares have lost 0.6% and LGI Homes shares have fallen 1.1%.

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  1. D.R. Horton Inc. "D.R. HORTON INC. TO RELEASE 2024 SECOND QUARTER EARNINGS ON APRIL 18, 2024."

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