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Category: Stock Market and D.R Horton (DHI)
Date: 7 July 2020 Stock Price of D.R Horton (DHI): $55.92 We take a look at the 2nd quarter earnings report of their 2020 fiscal year of D.R Horton, America's largest homebuilder by volume. The group stated in their latest earnings that they are feeling the impact of the coronavirus pandemic. In saying that for the 2nd quarter of 2020 the group still received net orders of 20 087
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We began to see the impact of the pandemic on our operations and housing demand in late March and April and our experienced operators across the country have and continue to quickly adjust to changing market conditions. -Donald R. Horton, Chairman of the Board"
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 2nd quarter 2020 earnings report
- Revenues: $4.5 billion (up from $4.128 billion for the same quarter of the previous year
- Revenue increased by 9.01% over the last 12 months
- Cost of sales: $3.450 billion (up from $3.256 billion for the same quarter of the previous year)
- Cost of sales increased by 5.96% over the last 12 months
- Net income: $482.7 million (up from $351.3 million for the same quarter of the previous year)
- Diluted earnings per share: $1.30 (up from $0.93 for the same quarter of the previous year)
- PE ratio of D.R Horton: 10.8
- Diluted weighted-average shares outstanding: 370.1 million (down from 377.7 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.522 billion
- Cash and cash equivalents per share: $4.11
- Cash and cash equivalents makes up 7.4% of D.R Horton's market capital
- Cash and cash equivalents makes up 23.8% of D.R Horton's total assets
- Inventories: $12.224 billion
- Inventories makes up 71.3% of D.R Horton's total assets
- Stockholders equity of D.R Horton : $10.458 billion
- Stockholders equity per share: $28.25
- D.R Horton is trading at 1.97 times its stockholders equity per share which is within the expected range of between 2 and 4 that most firms tend to trade at
- For some perspective the average price to book value of firms in the S&P 500 is 3.7
The summary below shows the number of homes closed for D.R Horton for the 3 months ended March 2020
Region Number of homes Value (in $ millions)
- East............................................................................................ 1,983 579.5
- Midwest..................................................................................... 877 308.7
- Southeast ................................................................................... 4,831 1,315.4
- South Central............................................................................. 4167 1,057.2
- Southwest .................................................................................. 942 267.6
- West........................................................................................... 2,001 902.8
- Total....................................................................................... 14 539 4,363.3
D.R Horton's management commentary on their 2nd quarter 2020 earnings report
ARLINGTON, Texas (Business Wire) - April 28, 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 second fiscal quarter ended March 31, 2020 increased 40% to $1.30 per diluted share compared to $0.93 per diluted share in the same quarter of fiscal 2019. Net income attributable to D.R. Horton in the second quarter of fiscal 2020 increased 37% to $482.7 million compared to $351.3 million in the same quarter of fiscal 2019. Homebuilding revenue for the second quarter of fiscal 2020 increased 10% to $4.4 billion from $4.0 billion in the same quarter of fiscal 2019. Homes closed in the quarter increased 8% to 14,539 homes compared to 13,480 homes closed in the same quarter of fiscal 2019.
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team delivered strong results in the second fiscal quarter of 2020 during an unprecedented time for our country, and we appreciate the efforts of our dedicated operational teams who continue to provide new homes to families across the United States. Since the beginning of the COVID-19 pandemic, our priority has been the health and safety of our employees, customers, trade partners and the communities we serve. We remain committed to all of the Company’s stakeholders as we continue to safely operate our business.
“We began to see the impact of the pandemic on our operations and housing demand in late March and April and our experienced operators across the country have and continue to quickly adjust to changing market conditions. We are well-positioned to successfully operate in this uncertain environment with our experienced team, industry-leading market share, broad geographic footprint and diverse product offerings. We expect to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations, limiting land acquisition and land development spending and adjusting our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions. “Our strong balance sheet, ample liquidity and low leverage provide us with flexibility to withstand difficult economic conditions, and we plan to maintain our disciplined approach to investing capital to enhance the long term value of our company.”
D.R. Horton, Inc. (NYSE:DHI), America’s Builder, today reported that net income per common share attributable to D.R. Horton for its second fiscal quarter ended March 31, 2020 increased 40% to $1.30 per diluted share compared to $0.93 per diluted share in the same quarter of fiscal 2019. Net income attributable to D.R. Horton in the second quarter of fiscal 2020 increased 37% to $482.7 million compared to $351.3 million in the same quarter of fiscal 2019. Homebuilding revenue for the second quarter of fiscal 2020 increased 10% to $4.4 billion from $4.0 billion in the same quarter of fiscal 2019. Homes closed in the quarter increased 8% to 14,539 homes compared to 13,480 homes closed in the same quarter of fiscal 2019.
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team delivered strong results in the second fiscal quarter of 2020 during an unprecedented time for our country, and we appreciate the efforts of our dedicated operational teams who continue to provide new homes to families across the United States. Since the beginning of the COVID-19 pandemic, our priority has been the health and safety of our employees, customers, trade partners and the communities we serve. We remain committed to all of the Company’s stakeholders as we continue to safely operate our business.
“We began to see the impact of the pandemic on our operations and housing demand in late March and April and our experienced operators across the country have and continue to quickly adjust to changing market conditions. We are well-positioned to successfully operate in this uncertain environment with our experienced team, industry-leading market share, broad geographic footprint and diverse product offerings. We expect to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations, limiting land acquisition and land development spending and adjusting our product offerings, incentives, home pricing, sales pace and inventory levels to optimize the return on our inventory investments in each of our communities based on local housing market conditions. “Our strong balance sheet, ample liquidity and low leverage provide us with flexibility to withstand difficult economic conditions, and we plan to maintain our disciplined approach to investing capital to enhance the long term value of our company.”
COVID-19
The Company’s results of operations can be affected by changes in economic conditions that negatively impact the housing, lot development and financial services markets. Economic fundamentals remained solid in the housing market throughout most of the second quarter of fiscal 2020, as interest rates on mortgage loans remained low, demand was strong and there was a limited supply of homes at affordable prices across most of the Company’s markets. However, during the latter part of March and into April, the impacts of the COVID-19 pandemic (COVID-19) and the related widespread reductions in economic activity across the United States began to adversely affect the Company’s business operations and the demand for its homes across all of its operating markets. The Company has experienced increases in sales cancellations and decreases in sales orders in late March and to date in April as compared to the same
eriod in the prior year. Month-to-date in April 2020, the Company’s net sales orders are approximately 11% lower than the same period a year ago. This month-to-date net sales trend may not be indicative of the net sales results that may be expected for the full month of April 2020, because a significant number of sales contract cancellations typically occur in the final days of each month, which can significantly affect net sales orders for the full month. As of the date of this report, the Company’s weekly net sales order volumes in the most recent two weeks have increased as compared to the preceding four weeks. In almost all of the municipalities across the U.S. where the Company operates, residential construction and financial services have been designated as essential businesses as part of critical infrastructure. The health and safety of D.R. Horton’s employees, customers and trade partners is the Company’s first priority as operations continue.
The Company has safely continued its homebuilding and financial services operations in those markets where allowed and has implemented operational protocols to comply with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities. The Company’s mortgage subsidiary, DHI Mortgage, has experienced lower pricing and gains on the sales of its mortgage loans and servicing rights in late March and April, due to disruption in the secondary mortgage markets. Many purchasers and servicers of mortgages have limited their purchases and tightened their credit standards due to liquidity and operational challenges caused by COVID-19 and the uncertainty of the impact of the borrower forbearance provisions of the federal Coronavirus Aid, Relief, and Economic Security Act enacted in late March 2020.
There is significant uncertainty regarding the extent to which and how long COVID-19 and related government directives, actions and economic relief efforts will disrupt the U.S. economy and level of employment, capital markets, secondary mortgage markets, consumer confidence, demand for the Company’s homes and availability of mortgage loans to homebuyers. The extent to which this impacts the Company’s operational and financial performance will depend on future developments, including the duration and spread of COVID-19 and the impact on D.R. Horton’s customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.
Guidance
As previously reported, due to the current uncertainty in the U.S. economy and the Company's business operations resulting from COVID-19, the Company has withdrawn its previously issued fiscal 2020 guidance.
Dividends
During the second quarter of fiscal 2020, the Company paid cash dividends of $64.1 million, for a total of $128.7 million of dividends paid during the six months ended March 31, 2020. Subsequent to quarter-end, the Company declared a quarterly cash dividend of $0.175 per common share that is payable on May 21, 2020 to stockholders of record on May 11, 2020.
Share Repurchases
The Company repurchased 4.0 million shares of common stock for $197.3 million during the second quarter of fiscal 2020, for a total of 7.0 million shares of common stock for $360.4 million during the six months ended March 31, 2020. The Company’s remaining stock repurchase authorization at March 31, 2020 was $535.3 million
The Company’s results of operations can be affected by changes in economic conditions that negatively impact the housing, lot development and financial services markets. Economic fundamentals remained solid in the housing market throughout most of the second quarter of fiscal 2020, as interest rates on mortgage loans remained low, demand was strong and there was a limited supply of homes at affordable prices across most of the Company’s markets. However, during the latter part of March and into April, the impacts of the COVID-19 pandemic (COVID-19) and the related widespread reductions in economic activity across the United States began to adversely affect the Company’s business operations and the demand for its homes across all of its operating markets. The Company has experienced increases in sales cancellations and decreases in sales orders in late March and to date in April as compared to the same
eriod in the prior year. Month-to-date in April 2020, the Company’s net sales orders are approximately 11% lower than the same period a year ago. This month-to-date net sales trend may not be indicative of the net sales results that may be expected for the full month of April 2020, because a significant number of sales contract cancellations typically occur in the final days of each month, which can significantly affect net sales orders for the full month. As of the date of this report, the Company’s weekly net sales order volumes in the most recent two weeks have increased as compared to the preceding four weeks. In almost all of the municipalities across the U.S. where the Company operates, residential construction and financial services have been designated as essential businesses as part of critical infrastructure. The health and safety of D.R. Horton’s employees, customers and trade partners is the Company’s first priority as operations continue.
The Company has safely continued its homebuilding and financial services operations in those markets where allowed and has implemented operational protocols to comply with social distancing and other health and safety standards as required by federal, state and local government agencies, taking into consideration guidelines of the Centers for Disease Control and Prevention and other public health authorities. The Company’s mortgage subsidiary, DHI Mortgage, has experienced lower pricing and gains on the sales of its mortgage loans and servicing rights in late March and April, due to disruption in the secondary mortgage markets. Many purchasers and servicers of mortgages have limited their purchases and tightened their credit standards due to liquidity and operational challenges caused by COVID-19 and the uncertainty of the impact of the borrower forbearance provisions of the federal Coronavirus Aid, Relief, and Economic Security Act enacted in late March 2020.
There is significant uncertainty regarding the extent to which and how long COVID-19 and related government directives, actions and economic relief efforts will disrupt the U.S. economy and level of employment, capital markets, secondary mortgage markets, consumer confidence, demand for the Company’s homes and availability of mortgage loans to homebuyers. The extent to which this impacts the Company’s operational and financial performance will depend on future developments, including the duration and spread of COVID-19 and the impact on D.R. Horton’s customers, trade partners and employees, all of which are highly uncertain and cannot be predicted.
Guidance
As previously reported, due to the current uncertainty in the U.S. economy and the Company's business operations resulting from COVID-19, the Company has withdrawn its previously issued fiscal 2020 guidance.
Dividends
During the second quarter of fiscal 2020, the Company paid cash dividends of $64.1 million, for a total of $128.7 million of dividends paid during the six months ended March 31, 2020. Subsequent to quarter-end, the Company declared a quarterly cash dividend of $0.175 per common share that is payable on May 21, 2020 to stockholders of record on May 11, 2020.
Share Repurchases
The Company repurchased 4.0 million shares of common stock for $197.3 million during the second quarter of fiscal 2020, for a total of 7.0 million shares of common stock for $360.4 million during the six months ended March 31, 2020. The Company’s remaining stock repurchase authorization at March 31, 2020 was $535.3 million
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 $28.20 and it is currently trading at $55.92 a stock. That is a very strong return of 98.3% provided to D.R Horton stockholders over the last 5 years.
The stock of D.R Horton is trading at closer to its 52 week high of $62.54 and far away from its 52 week low of $25.51 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 closer to its 52 week high of $62.54 and far away from its 52 week low of $25.51 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 Finance.yahoo.com
D.R. Horton, Inc. DHI is expected to benefit from industry-leading market share, solid acquisition strategy, well-stocked supply of land, lots and homes, along with affordable product offerings across multiple brands.
Shares of this Texas-based homebuilder have returned 48% over the past three months, steadily outperforming the Zacks Building Products - Home Builders industry’s 46.8% rally. Also, it has outperformed the S&P 500’s 18% rise in the said period. The solid performance can be attributed to an impressive earnings surprise trend. D.R. Horton’s earnings surpassed the Zacks Consensus Estimate in seven of the trailing 10 quarters. Its revenues also surpassed the consensus mark in eight of the trailing 10 quarters. The trend is expected to continue in the near term as well, supported by solid fiscal 2019 and first-half fiscal 2020 results.
However, record job losses, and fear and uncertainty regarding the future as a result of the COVID-19 pandemic are concerns for homebuilders like D.R. Horton, KB Home KBH, PulteGroup Inc. PHM, NVR, Inc. NVR and others.
Nonetheless, earnings estimates for 2020 have moved 1.5% north in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
Read the full article here
D.R. Horton, Inc. DHI is expected to benefit from industry-leading market share, solid acquisition strategy, well-stocked supply of land, lots and homes, along with affordable product offerings across multiple brands.
Shares of this Texas-based homebuilder have returned 48% over the past three months, steadily outperforming the Zacks Building Products - Home Builders industry’s 46.8% rally. Also, it has outperformed the S&P 500’s 18% rise in the said period. The solid performance can be attributed to an impressive earnings surprise trend. D.R. Horton’s earnings surpassed the Zacks Consensus Estimate in seven of the trailing 10 quarters. Its revenues also surpassed the consensus mark in eight of the trailing 10 quarters. The trend is expected to continue in the near term as well, supported by solid fiscal 2019 and first-half fiscal 2020 results.
However, record job losses, and fear and uncertainty regarding the future as a result of the COVID-19 pandemic are concerns for homebuilders like D.R. Horton, KB Home KBH, PulteGroup Inc. PHM, NVR, Inc. NVR and others.
Nonetheless, earnings estimates for 2020 have moved 1.5% north in the past 60 days. This positive trend signifies bullish analysts’ sentiments and justifies the company’s Zacks Rank #1 (Strong Buy), indicating robust fundamentals and the expectation of outperformance in the near term. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 $73.20 a stock (up slightly from our 1st quarter 2020 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 $73.20. A good entry point into D.R Horton would therefore be at $65.90 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 $73.20. A good entry point into D.R Horton would therefore be at $65.90 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 3rd quarter 2020 earnings report in late July 2020