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Category: Stock Market and D.R Horton (DHI)
Date: 11 November 2020 Stock Price of D.R Horton (DHI): $71.32 We take a look at the 4th quarter earnings report of their 2020 fiscal year of D.R Horton, America's largest homebuilder by volume. The group reported revenues of $6.4 billion and net income of $829 million for the 4th quarter of their 2020 fiscal year.
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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 4th quarter 2020 earnings report
- Revenues: $6.4 billion (up from $4.128 billion for the same quarter of the previous year
- Revenue increased by 27% over the last 12 months
- Cost of sales: $4.735 billion (up from $3.881 billion for the same quarter of the previous year)
- Cost of sales increased by 22% over the last 12 months
- Net income: $829 million (up from $503 million for the same quarter of the previous year)
- Diluted earnings per share: $2.24 (up from $1.35 for the same quarter of the previous year)
- PE ratio of D.R Horton: 11.1
- Diluted weighted-average shares outstanding: 364.1 million (down from 369.7 million for the same quarter of the previous year)
- Cash and cash equivalents: $3.018 billion
- Cash and cash equivalents per share: $8.21
- Cash and cash equivalents makes up 11.6% of D.R Horton's market capital
- Cash and cash equivalents makes up 15.9% of D.R Horton's total assets
- Inventories: $12.237 billion
- Inventories makes up 64.7% of D.R Horton's total assets
- Stockholders equity of D.R Horton : $12.121 billion
- Stockholders equity per share: $33.29
- D.R Horton is trading at 2.1 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 3.8
The summary below shows the number of homes closed for D.R Horton for the 3 months ended September 2020
Region Number of homes Value (in $ millions)
- East............................................................................................ 3,228 1,013
- Midwest..................................................................................... 1,496 549.3
- Southeast ................................................................................... 7,835 2,248
- South Central............................................................................. 6,731 1,751
- Southwest .................................................................................. 1,554 466.3
- West........................................................................................... 2,882 1.268
- Total....................................................................................... 23 726 7,298.4
D.R Horton's management commentary on their 4th quarter 2020 earnings report
ARLINGTON, Texas (Business Wire) - November 10, 2020
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team finished the year strong, highlighted by an 81% increase in net sales orders in the fourth quarter to 23,726 homes, a 60% increase in consolidated pre-tax income to $1.1 billion and a 27% increase in revenues to $6.4 billion. With a record 65,388 homes closed in fiscal 2020, D.R. Horton completed its 19th consecutive year as the largest homebuilder in the United States. "Over the last five years, we have grown our consolidated revenues by 88% and our earnings per share by 216%, while also generating $5.2 billion of cash flows from homebuilding operations, more than doubling our book value per share, reducing our homebuilding leverage to 17.5% and significantly increasing our returns on inventory and equity to greater than 20%. These results reflect the strength of our experienced teams, industryleading market share, broad geographic footprint and affordable product offerings across multiple brands.
“We appreciate the continued efforts of our homebuilding and financial services teams who are providing new homes to families across the United States during the ongoing pandemic, and our priority continues to be the health and safety of our employees, customers, trade partners and the communities we serve. We plan to continue to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations and managing 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, liquidity and low leverage provide us with flexibility to operate effectively through changing economic conditions, and we plan to maintain our disciplined approach to investing capital to enhance the long-term value of our company. With 38,000 homes in inventory, an ample supply of lots and continued strong sales trends in October, we are well-positioned for another great year in fiscal 2021."
Donald R. Horton, Chairman of the Board, said, “The D.R. Horton team finished the year strong, highlighted by an 81% increase in net sales orders in the fourth quarter to 23,726 homes, a 60% increase in consolidated pre-tax income to $1.1 billion and a 27% increase in revenues to $6.4 billion. With a record 65,388 homes closed in fiscal 2020, D.R. Horton completed its 19th consecutive year as the largest homebuilder in the United States. "Over the last five years, we have grown our consolidated revenues by 88% and our earnings per share by 216%, while also generating $5.2 billion of cash flows from homebuilding operations, more than doubling our book value per share, reducing our homebuilding leverage to 17.5% and significantly increasing our returns on inventory and equity to greater than 20%. These results reflect the strength of our experienced teams, industryleading market share, broad geographic footprint and affordable product offerings across multiple brands.
“We appreciate the continued efforts of our homebuilding and financial services teams who are providing new homes to families across the United States during the ongoing pandemic, and our priority continues to be the health and safety of our employees, customers, trade partners and the communities we serve. We plan to continue to maintain our flexible operational and financial position by generating strong cash flows from our homebuilding operations and managing 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, liquidity and low leverage provide us with flexibility to operate effectively through changing economic conditions, and we plan to maintain our disciplined approach to investing capital to enhance the long-term value of our company. With 38,000 homes in inventory, an ample supply of lots and continued strong sales trends in October, we are well-positioned for another great year in fiscal 2021."
COVID-19
During the latter part of March 2020, the impacts of the COVID-19 pandemic (C-19) and the related widespread reductions in economic activity across the United States began to adversely affect the Company’s business. However, residential construction and financial services are designated as essential businesses as part of critical infrastructure in almost all of the municipalities across the U.S. where the Company operates. The Company implemented operational protocols to comply with social distancing and other health and safety guidelines 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 remains cautious as to the ongoing impact C-19 and other external factors may have on the economy and its operations. There is significant uncertainty regarding the extent to which and how long C-19 and its related effects will impact 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 C-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
Based on current market conditions, D.R. Horton is providing initial guidance for fiscal 2021 including:
• Consolidated revenues of $24.0 billion to $25.0 billion
• Homes closed between 77,000 homes and 80,000 homes
• Income tax rate of approximately 24%
Dividends
In fiscal 2020, the Company paid cash dividends of $63.7 million in the fourth quarter and $256.0 million during the year. Subsequent to year-end, the Company declared a quarterly cash dividend of $0.20 per common share, an increase of 14% compared to its most recent dividend paid. The dividend is payable on December 14, 2020 to stockholders of record on December 4, 2020.
Share Repurchases
The Company repurchased 7.0 million shares of common stock for $360.4 million during fiscal 2020, none of which were purchased in the second half of the year. The Company's remaining stock repurchase authorization at September 30, 2020 was $535.3 million.
During the latter part of March 2020, the impacts of the COVID-19 pandemic (C-19) and the related widespread reductions in economic activity across the United States began to adversely affect the Company’s business. However, residential construction and financial services are designated as essential businesses as part of critical infrastructure in almost all of the municipalities across the U.S. where the Company operates. The Company implemented operational protocols to comply with social distancing and other health and safety guidelines 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 remains cautious as to the ongoing impact C-19 and other external factors may have on the economy and its operations. There is significant uncertainty regarding the extent to which and how long C-19 and its related effects will impact 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 C-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
Based on current market conditions, D.R. Horton is providing initial guidance for fiscal 2021 including:
• Consolidated revenues of $24.0 billion to $25.0 billion
• Homes closed between 77,000 homes and 80,000 homes
• Income tax rate of approximately 24%
Dividends
In fiscal 2020, the Company paid cash dividends of $63.7 million in the fourth quarter and $256.0 million during the year. Subsequent to year-end, the Company declared a quarterly cash dividend of $0.20 per common share, an increase of 14% compared to its most recent dividend paid. The dividend is payable on December 14, 2020 to stockholders of record on December 4, 2020.
Share Repurchases
The Company repurchased 7.0 million shares of common stock for $360.4 million during fiscal 2020, none of which were purchased in the second half of the year. The Company's remaining stock repurchase authorization at September 30, 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 $31 and it is currently trading at $71.32 a stock. That is a very strong return of 130% 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 and far away from its 52 week low which 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 and far away from its 52 week low which is a clear indication that the short term sentiment and momentum of D.R Horton's stock is very positive
D.R Horton (DHI) vs KB Homes (KBH) vs Beazer Homes (BZH) stock over the last 5 years
The image below shows the stock price history of D.R Horton (DHI) vs KB Homes (KBH) vs Beazer Homes (BZH) stock over the last 5 years. All three of these firms are major home builders in the United States. The summary below shows the stock price returns provided by the three home builders over the last 5 years.
The stock of KB Homes (KBH) has easily outperformed that of D.R Horton and Beazer Homes (BZH) over the last 5 years.
- KB Homes (KBH): 149.7%
- D.R Horton (DHI): 122%
- Beazer Homes (BZH): 8.8%
The stock of KB Homes (KBH) has easily outperformed that of D.R Horton and Beazer Homes (BZH) over the last 5 years.
Recent coverage of D.R Horton
The extract below discusses the latest regarding D.R Horton s as obtained from Foxbusiness.com
D.R. Horton Inc. reported strong fourth-quarter results and guided above Wall Street expectations as low interest rates and a flight to the suburbs amid the COVID-19 pandemic fueled a building boom.The Arlington, Texas-based homebuilder reported fourth-quarter profit surged 64% from a year ago to $829 million, or $2.24 per share. Wall Street analysts surveyed by Refinitiv were expecting a profit of $1.76 per share.
Revenue totaled $6.4 billion as the number of homes closed rose 26% year-over-year to 20,248. Net sales orders soared 81% from a year ago to 23,726 as the cancellation rate fell 4 percentage points to 19%. “The D.R. Horton team finished the year strong,” Donald R. Horton, chairman of the board, said in a statement. “With a record 65,388 homes closed in fiscal 2020, D.R. Horton completed its 19th consecutive year as the largest homebuilder in the United States.”
For the full year, D.R. Horton earned $2.4 billion, or a diluted $6.41 per share, as revenue increased 15% to $20.3 billion. The company increased its quarterly dividend by 2.5 cents to 20 cents per share. Looking ahead, D.R. Horton expects to build between 77,000 and 80,000 units in the current fiscal year, compared with analysts' average estimate of 75,981. Consolidated revenues are forecast between $24 billion and $25 billion.
Read the full article here
D.R. Horton Inc. reported strong fourth-quarter results and guided above Wall Street expectations as low interest rates and a flight to the suburbs amid the COVID-19 pandemic fueled a building boom.The Arlington, Texas-based homebuilder reported fourth-quarter profit surged 64% from a year ago to $829 million, or $2.24 per share. Wall Street analysts surveyed by Refinitiv were expecting a profit of $1.76 per share.
Revenue totaled $6.4 billion as the number of homes closed rose 26% year-over-year to 20,248. Net sales orders soared 81% from a year ago to 23,726 as the cancellation rate fell 4 percentage points to 19%. “The D.R. Horton team finished the year strong,” Donald R. Horton, chairman of the board, said in a statement. “With a record 65,388 homes closed in fiscal 2020, D.R. Horton completed its 19th consecutive year as the largest homebuilder in the United States.”
For the full year, D.R. Horton earned $2.4 billion, or a diluted $6.41 per share, as revenue increased 15% to $20.3 billion. The company increased its quarterly dividend by 2.5 cents to 20 cents per share. Looking ahead, D.R. Horton expects to build between 77,000 and 80,000 units in the current fiscal year, compared with analysts' average estimate of 75,981. Consolidated revenues are forecast between $24 billion and $25 billion.
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 price (full value price) for D.R Horton at $87.20 a stock (up from our 2nd 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 price (full value price) which in this case is $87.20. A good entry point into D.R Horton would therefore be at $78.50 or below. Since the stock of D.R Horton is trading at 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 price (full value price) which in this case is $87.20. A good entry point into D.R Horton would therefore be at $78.50 or below. Since the stock of D.R Horton is trading at 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 2021 earnings report in early February 2021