The largest publicly traded U.S. home builder has given investors reason for optimism on Tuesday, after
D.R. Horton
not only beat earnings estimates and raised its dividend, but also forecast a better-than-expected year to come.
D.R. Horton (ticker: DHI) reported earnings of $4.45 a share on revenue of $10.5 billion in the three months ended in September, its fourth fiscal quarter. Analysts surveyed by FactSet had expected the company, a bellwether for U.S. residential housing, to report earnings of $3.94 a share on revenue of $10 billion.
While fiscal 2023 ended with revenue up to $35.5 billion from $33.5 billion in 2022, earnings of $13.82 a share marked a decline from $16.41 last year, representative of margin pressures. D.R. Horton flagged in July that margins were likely to fall from last year’s record levels due to cost inflation, pricing adjustments, and incentives to address affordability from higher mortgage rates. The company reported a 17.8% pretax profit margin in 2023, down from 22.8% in 2022.
“Despite continued higher mortgage rates and inflationary pressures, our net sales orders increased 39% from the prior year quarter, as the supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable,” company chairman Donald R. Horton said in a statement.
The company also raised its quarterly dividend by 20% from its last distribution to 30 cents a share, and forecast share repurchases in fiscal 2024 or around $1.5 billion.
Wall Street should have more to like than the buyback guidance, too. D.R. Horton said it expected revenue of between $36 billion and $37 billion in fiscal 2024, suggesting possible upside to the consensus estimate among analysts of less than $36.1 billion.
This could have implications beyond just D.R Horton. “They are in so many markets and states that you get a super comprehensive view of the national housing market,” Carl Reichardt, a BTIG analyst covering builders, said ahead of the group’s results.
D.R. Horton is expected to give more detailed guidance on its earnings call.
Shares in the company fell 1% in premarket trading on Tuesday. Futures tracking the wider
S&P 500
index were down 0.3%.
Write to Shaina Mishkin at shaina.mishkin@dowjones.com and Jack Denton at jack.denton@barrons.com
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