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Category: Stock Market and D.R Horton
Date: 14 November 2019 Stock Price: $54.33 We take a look at the 4th quarter earnings report of their 2019 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 4th quarter 2019 earnings report
- Revenues: $5.038 billion (up from $4.510 billion for the same quarter of the previous year
- Revenue increased by 11.7% over the last 12 months
- Cost of sales: $3.881 billion (up from $3.459 billion for the same quarter of the previous year)
- Cost of sales increased by 12.2% over the last 12 months
- Net income: $505.3 million (up from $466.1 million for the same quarter of the previous year)
- Diluted earnings per share: $1.35 (up from $1.22 for the same quarter of the previous year)
- Diluted weighted-average shares outstanding: 374.8 million (down from 382.7 million for the same quarter of the previous year)
- Cash and cash equivalents: $1.494 billion
- Cash and cash equivalents per share: $3.98
- Cash and cash equivalents makes up 7.3% of D.R Horton's market capital
- Cash and cash equivalents makes up 9.57% of D.R Horton's total assets
- Inventories: $11.282 billion
- Inventories makes up 72.3% of D.R Horton's total assets
- Stockholders equity of D.R Horton : $10.020 billion
- Stockholders equity per share: $26.73
- D.R Horton is trading at 2.03 times its stockholders equity per share which is within the expected range of between 2 and 4 that most firms tend to trade at
- Cash generated from operations (for full fiscal 2019): $892.2 million
- Cash generated from operations per share (for full fiscal 2019): $2.38
D.R Horton's management commentary on their 4th quarter 2019 earnings report
Donald R. Horton, Chairman of the Board, said, “With 56,975 homes closed in fiscal 2019, D.R. Horton completed its 18th consecutive year as the largest homebuilder in the United States. Over the last five years, we have grown our revenues by 119% and our earnings per share by 186%, while also generating $4 billion of cash flows from homebuilding operations, significantly increasing returns on inventory and equity and reducing our debt. “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.
“With our experienced operational teams, industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands, we are well-positioned for fiscal 2020 and future years.”
“With our experienced operational teams, industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands, we are well-positioned for fiscal 2020 and future years.”
Dividends
In fiscal 2019, the Company paid cash dividends of $55.5 million in the fourth quarter and $223.4 million during the year. Subsequent to year-end, the Company declared a quarterly cash dividend of $0.175 per common share, an increase of 17% compared to its most recent dividend paid. The dividend is payable on December 11, 2019 to stockholders of record on November 27, 2019. Share Repurchases The Company repurchased 2.1 million shares of common stock for $104.3 million during the fourth quarter of fiscal 2019 and 11.9 million shares of common stock for $479.8 million during the year. The Company's remaining stock repurchase authorization at September 30, 2019 was $895.7 million.
Guidance
D.R. Horton updates its previously issued fiscal 2020 guidance and provides additional guidance for fiscal 2020 including: • Consolidated revenues of $18.5 billion to $19.0 billion • Homes closed between 60,000 homes and 61,000 homes • Income tax rate of approximately 25% • Cash flow from homebuilding operations in excess of $1.0 billion • Outstanding share count at end of fiscal 2020 down by approximately 2% compared to end of fiscal 2019
In fiscal 2019, the Company paid cash dividends of $55.5 million in the fourth quarter and $223.4 million during the year. Subsequent to year-end, the Company declared a quarterly cash dividend of $0.175 per common share, an increase of 17% compared to its most recent dividend paid. The dividend is payable on December 11, 2019 to stockholders of record on November 27, 2019. Share Repurchases The Company repurchased 2.1 million shares of common stock for $104.3 million during the fourth quarter of fiscal 2019 and 11.9 million shares of common stock for $479.8 million during the year. The Company's remaining stock repurchase authorization at September 30, 2019 was $895.7 million.
Guidance
D.R. Horton updates its previously issued fiscal 2020 guidance and provides additional guidance for fiscal 2020 including: • Consolidated revenues of $18.5 billion to $19.0 billion • Homes closed between 60,000 homes and 61,000 homes • Income tax rate of approximately 25% • Cash flow from homebuilding operations in excess of $1.0 billion • Outstanding share count at end of fiscal 2020 down by approximately 2% compared to 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 $24.40 and it is currently trading at $54.33 a stock. That is a very decent return of 122.6% 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 $56.67 and far away from its 52 week low of $32.29 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 $56.67 and far away from its 52 week low of $32.29 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
Homebuilder D.R. Horton (DHI - Get Report) set an all-time intraday high of $55.67 at the open Tuesday after beating earnings expectations. The stock has an elevated P/E multiple for a homebuilder and the stock tested its monthly risky level at $55.43 as an opportunity to book profits. The benchmark homebuilder has a cross-nation footprint in building high-quality single-family homes. As a full-service builder the company also provides mortgage financing. The stock has become a trading vehicle, not a long-term investment, as its P/E multiple is 12.27, according to Macrotrends. Homebuilders are a buy only when their P/E ratio is 8.00 or lower.
D.R. Horton had a miserable 2018 ending the year deep in bear market territory with an annual decline of 35%. Since bottoming at $32.19 on Dec. 24, the stock is in bull market territory up 62.6% at its close of $52.65 on Nov. 11. This stock is the only major homebuilder setting an all-time high as others remain well below their July 2005 highs.
Read the full article here
Homebuilder D.R. Horton (DHI - Get Report) set an all-time intraday high of $55.67 at the open Tuesday after beating earnings expectations. The stock has an elevated P/E multiple for a homebuilder and the stock tested its monthly risky level at $55.43 as an opportunity to book profits. The benchmark homebuilder has a cross-nation footprint in building high-quality single-family homes. As a full-service builder the company also provides mortgage financing. The stock has become a trading vehicle, not a long-term investment, as its P/E multiple is 12.27, according to Macrotrends. Homebuilders are a buy only when their P/E ratio is 8.00 or lower.
D.R. Horton had a miserable 2018 ending the year deep in bear market territory with an annual decline of 35%. Since bottoming at $32.19 on Dec. 24, the stock is in bull market territory up 62.6% at its close of $52.65 on Nov. 11. This stock is the only major homebuilder setting an all-time high as others remain well below their July 2005 highs.
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 $67.20 a stock. 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 $67.20 A good entry point into D.R Horton would therefore be at $60.50 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 $67.20 A good entry point into D.R Horton would therefore be at $60.50 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 1st quarter 2020 earnings report in mid February 2020