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Category: Stock Market and D.R Horton
Date: 28 January 2020 Stock Price: $59.67 We take a look at the 1st quarter earnings report of their 2020 fiscal year of D.R Horton, America's largest homebuilder by volume. The stock has been experiencing a very good time with it recently hitting an all time high
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About D.R Horton
D.R. Horton, Inc., America’s Builder, has been the largest homebuilder by volume in the United States since 2002. Founded in 1978 in Fort Worth, Texas, D.R. Horton has operations in 90 markets in 29 states across the United States and closed 56,975 homes during its fiscal year ended September 30, 2019. The Company is engaged in the construction and sale of high-quality homes through its diverse brand portfolio that includes D.R. Horton, Emerald Homes, Express Homes and Freedom Homes with sales prices ranging from $100,000 to over $1,000,000. D.R. Horton also provides mortgage financing, title services and insurance agency services for homebuyers through its mortgage, title and insurance subsidiaries.
Overview of D.R Horton's 1st quarter 2020 earnings report
- Revenues: $4.020 billion (up from $3.519 billion for the same quarter of the previous year
- Revenue increased by 14.2% over the last 12 months
- Cost of sales: $3.084 billion (up from $2.751 billion for the same quarter of the previous year)
- Cost of sales increased by 12.1% over the last 12 months
- Net income: $431.3 million (up from $287.2 million for the same quarter of the previous year)
- Diluted earnings per share: $1.16 (up from $0.76 for the same quarter of the previous year)
- PE ratio of D.R Horton: 12.9
- PE ratio of D.R Horton: 12.9
- Diluted weighted-average shares outstanding: 373.4 million (down from 380.1 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.595 billion
- Cash and cash equivalents per share: $4.27/59
- Cash and cash equivalents makes up 7.2% of D.R Horton's market capital
- Cash and cash equivalents makes up 9.78% of D.R Horton's total assets
- Inventories: $11.899 billion
- Inventories makes up 72.8% of D.R Horton's total assets
- Stockholders equity of D.R Horton : $10.502 billion
- Stockholders equity per share: $28.13
- D.R Horton is trading at 2.12 times its stockholders equity per share which is within the expected range of between 2 and 4 that most firms tend to trade at
The summary below shows the number of sales orders for D.R Horton for the 3 months ended December 2019
Region Number of homes Value (in $ millions)
- East............................................................................................ 1,841 546.8
- Midwest..................................................................................... 714 255.4
- Southeast ................................................................................... 4,374 1,191.8
- South Central............................................................................. 3,775 964.2
- Southwest .................................................................................. 667 199.7
- West........................................................................................... 1,755 791.9
- Total....................................................................................... 13,126 3,949.8
D.R Horton's management commentary on their 1st quarter 2020 earnings report
ARLINGTON, Texas (Business Wire) - January 27, 2020, D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported that net income per common share attributable to D.R. Horton for its first fiscal quarter ended December 31, 2019 increased 53% to $1.16 per diluted share compared to $0.76 per diluted share in the same quarter of fiscal 2019. Net income attributable to D.R. Horton in the first quarter of fiscal 2020 increased 50% to $431.3 million compared to $287.2 million in the same quarter of fiscal 2019. The current quarter results include a tax benefit of $32.9 million related to federal energy efficient homes tax credits that were retroactively reinstated during the quarter.
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team delivered strong results in the first fiscal quarter of 2020, highlighted by EPS increasing 53% to $1.16 per diluted share. Our consolidated pre-tax income in the first quarter increased 39% to $523.3 million on a 14% increase in revenues to $4.0 billion. Our pre-tax profit margin improved 230 basis points to 13.0%, and the value of our net sales orders increased 22%. These results reflect our experienced operational teams, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.
“We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid. With 30,200 homes in inventory at the end of December, we are well-positioned for the spring selling season and the remainder of fiscal 2020.
“Our continued strategic focus is to grow our revenues and profits and consolidate market share, while generating strong annual operating cash flows and returns. Our balance sheet strength, liquidity and earnings growth provide us with significant financial flexibility, and we plan to maintain our disciplined, opportunistic approach to investing capital to enhance the long-term value of our company.”
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team delivered strong results in the first fiscal quarter of 2020, highlighted by EPS increasing 53% to $1.16 per diluted share. Our consolidated pre-tax income in the first quarter increased 39% to $523.3 million on a 14% increase in revenues to $4.0 billion. Our pre-tax profit margin improved 230 basis points to 13.0%, and the value of our net sales orders increased 22%. These results reflect our experienced operational teams, industry-leading market share, broad geographic footprint and diverse product offerings across multiple brands.
“We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid. With 30,200 homes in inventory at the end of December, we are well-positioned for the spring selling season and the remainder of fiscal 2020.
“Our continued strategic focus is to grow our revenues and profits and consolidate market share, while generating strong annual operating cash flows and returns. Our balance sheet strength, liquidity and earnings growth provide us with significant financial flexibility, and we plan to maintain our disciplined, opportunistic approach to investing capital to enhance the long-term value of our company.”
Dividends
During the first quarter of fiscal 2020, the Company paid cash dividends of $64.6 million. Subsequent to quarter-end, the Company declared a quarterly cash dividend of $0.175 per common share that is payable on February 24, 2020 to stockholders of record on February 10, 2020. Share Repurchases The Company repurchased 3.0 million shares of common stock for $163.1 million during the first quarter of fiscal 2020. The Company’s remaining stock repurchase authorization at December 31, 2019 was $732.6 million. The authorization has no expiration date.
Guidance
The Company is updating its fiscal 2020 guidance as follows:
• Consolidated revenues of $18.5 billion to $19.1 billion compared to prior guidance of $18.5 billion to $19.0 billion
• Homes closed in the range of 60,000 homes and 61,500 homes compared to prior guidance of 60,000 homes and 61,000 homes
• Income tax rate between 23% and 24% for the second, third and fourth quarters of fiscal 2020
The Company reaffirms its previously issued fiscal 2020 guidance for other metrics including:
• Cash flow from homebuilding operations in excess of $1.0 billion
• Outstanding share count at end of fiscal 2020 down approximately 2% from end of fiscal 2019
During the first quarter of fiscal 2020, the Company paid cash dividends of $64.6 million. Subsequent to quarter-end, the Company declared a quarterly cash dividend of $0.175 per common share that is payable on February 24, 2020 to stockholders of record on February 10, 2020. Share Repurchases The Company repurchased 3.0 million shares of common stock for $163.1 million during the first quarter of fiscal 2020. The Company’s remaining stock repurchase authorization at December 31, 2019 was $732.6 million. The authorization has no expiration date.
Guidance
The Company is updating its fiscal 2020 guidance as follows:
• Consolidated revenues of $18.5 billion to $19.1 billion compared to prior guidance of $18.5 billion to $19.0 billion
• Homes closed in the range of 60,000 homes and 61,500 homes compared to prior guidance of 60,000 homes and 61,000 homes
• Income tax rate between 23% and 24% for the second, third and fourth quarters of fiscal 2020
The Company reaffirms its previously issued fiscal 2020 guidance for other metrics including:
• Cash flow from homebuilding operations in excess of $1.0 billion
• Outstanding share count at end of fiscal 2020 down approximately 2% from end of fiscal 2019
D.R Horton (NYSE: DHI) stock price history
The image below shows the stock price history of D.R Horton (NYSE: DHI) over the last 5 years. And it's been a very good time for D.R Horton stockholders. 5 years ago the stock was trading at around $24.52 and it is currently trading at $59.67 a stock. That is a very strong return of 143.3% provided to D.R Horton stockholders over the last 5 years.
The stock of D.R Horton is trading at very close to its 52 week high of $60.95 and far away from its 52 week low of $34.96 which to us is a clear indication that the short term sentiment and momentum of D.R Horton's stock is very positive
The stock of D.R Horton is trading at very close to its 52 week high of $60.95 and far away from its 52 week low of $34.96 which to us is a clear indication that the short term sentiment and momentum of D.R Horton's stock is very positive
Recent coverage of D.R Horton
The extract below discusses the latest regarding D.R Horton s as obtained from TheStreet.com
R Horton Inc. (DHI) - Get Report posted stronger-than-expected first quarter earnings Monday, and boosted its 2020 sales forecast as low mortgage rates and surging activity continue to support the U.S. housing market.DR Horton said earnings for the three months ending in December, its fiscal first quarter, came in at $1.16 per share, up more than 52% from the same period last year and firmly ahead of the Street consensus forecast of 92 cents. Group revenues, the company said, rose 14.2% to $4.02 billion, again beating analysts' estimates of a $3.77 billion tally.
Looking into its 2020 fiscal year, DR Horton said it sees full-year revenues in the region of $18.5 billion to $19.1 billion, and noted the "good demand" will bring 2020 home closures to between 60,000 and 61,500 units. “We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid," said CEO chairman Donald Horton. "With 30,200 homes in inventory at the end of December, we are well-positioned for the spring selling season and the remainder of fiscal 2020."
Read the full article here
R Horton Inc. (DHI) - Get Report posted stronger-than-expected first quarter earnings Monday, and boosted its 2020 sales forecast as low mortgage rates and surging activity continue to support the U.S. housing market.DR Horton said earnings for the three months ending in December, its fiscal first quarter, came in at $1.16 per share, up more than 52% from the same period last year and firmly ahead of the Street consensus forecast of 92 cents. Group revenues, the company said, rose 14.2% to $4.02 billion, again beating analysts' estimates of a $3.77 billion tally.
Looking into its 2020 fiscal year, DR Horton said it sees full-year revenues in the region of $18.5 billion to $19.1 billion, and noted the "good demand" will bring 2020 home closures to between 60,000 and 61,500 units. “We continue to see good demand and a limited supply of homes at affordable prices across our markets, and economic fundamentals and financing availability remain solid," said CEO chairman Donald Horton. "With 30,200 homes in inventory at the end of December, we are well-positioned for the spring selling season and the remainder of fiscal 2020."
Read the full article here
D.R Horton (NYSE: DHI) latest stock valuation
So what is D.R Horton (NYSE:DHI) stock worth based on the release of their latest earnings report and the fiscal guidance provided for their 2020 fiscal year? Based on the earnings reported and the guidance provided our valuation model provides a target (full value) price for D.R Horton at $69.90 a stock (up slightly from our 4th quarter 2019 earnings report valuation of D.R Horton). We therefore believe that the stock is undervalued.
We usually suggest long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $69.90 A good entry point into D.R Horton would therefore be at $62.90 or below. Since the stock of D.R Horton is trading at well below our suggested entry point into the group's stock we rate the stock of D.R Horton as a buy
We usually suggest long term fundamental or value investors look to enter a stock at least 10% below our target (full value) price which in this case is $69.90 A good entry point into D.R Horton would therefore be at $62.90 or below. Since the stock of D.R Horton is trading at well below our suggested entry point into the group's stock we rate the stock of D.R Horton as a buy
Next earnings release of D.R Horton
It is expected that homebuilder D.R Horton will their 2nd quarter 2020 earnings report in late April 2020