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Homebuilder Stocks: Red Flags All Over D.R. Horton's Q4 Earnings Report
invite response
2013 Nov 16, 12:53pm 979 views 2 comments
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1
anonymous
2019 Jan 25, 3:28pm
What DR Horton Earnings Indicate About the Housing Market
2018 was not a good year for homebuilders. D.R. Horton, the largest measured by market cap, has seen its share price drop by about 24% over the past 12 months. Of the six homebuilders we looked at, none has lost less than 22% of its value in the trailing 12 months, and the worst is down nearly 40%.
Extrapolating from the numbers D.R. Horton reports, if home sales are up 7% and homebuilding revenue rose 6%, then the company’s profit per home is likely under pressure. The company does not report its average sales price on a new home.
New orders are up 3%, and the order value is flat, another sign that D.R. Horton may be lowering prices (or building less expensive homes) to offset rising interest rates and materials costs. The cost of sales rose 6.6% year over year, indicating materials costs continue to increase faster than sales prices.
The company did not offer guidance for the current quarter or for the 2019 fiscal year. Analysts are looking for second-quarter EPS of $0.98 and revenue of $4.096 billion. For the full year, estimates call for EPS of $4.24 and revenue of $17.25 billion, both lower than at the end of the prior quarter.
D.R. Horton’s stock traded up about 0.5% in Thursday’s premarket session at $38.50, in a 52-week range of $32.39 to $51.24. The 12-month consensus price target on the stock was $44.53 before this morning’s report, down about 10% from the prior quarter consensus.
https://247wallst.com/housing/2019/01/25/what-dr-horton-earnings-indicate-about-the-housing-market/
2018 was not a good year for homebuilders. D.R. Horton, the largest measured by market cap, has seen its share price drop by about 24% over the past 12 months. Of the six homebuilders we looked at, none has lost less than 22% of its value in the trailing 12 months, and the worst is down nearly 40%.
Extrapolating from the numbers D.R. Horton reports, if home sales are up 7% and homebuilding revenue rose 6%, then the company’s profit per home is likely under pressure. The company does not report its average sales price on a new home.
New orders are up 3%, and the order value is flat, another sign that D.R. Horton may be lowering prices (or building less expensive homes) to offset rising interest rates and materials costs. The cost of sales rose 6.6% year over year, indicating materials costs continue to increase faster than sales prices.
The company did not offer guidance for the current quarter or for the 2019 fiscal year. Analysts are looking for second-quarter EPS of $0.98 and revenue of $4.096 billion. For the full year, estimates call for EPS of $4.24 and revenue of $17.25 billion, both lower than at the end of the prior quarter.
D.R. Horton’s stock traded up about 0.5% in Thursday’s premarket session at $38.50, in a 52-week range of $32.39 to $51.24. The 12-month consensus price target on the stock was $44.53 before this morning’s report, down about 10% from the prior quarter consensus.
https://247wallst.com/housing/2019/01/25/what-dr-horton-earnings-indicate-about-the-housing-market/
2
Heraclitusstudent
2019 Jan 25, 4:57pm
Heraclitusstudent
2019 Jan 25, 4:57pm
People worry about builders because home sales are typical early indicator of recessions.
But we are in a situation where there isn't enough housing, people needs roofs. Millennials are more numerous than boomers, and coming to an age when people typically buy homes, and are kicked out their high school rooms where they lived so far.
Home sales are decreasing but only because of high prices. And mostly existing home sales are affected.
All this means as long as builders can build cheap/entry level homes, they should be fine.
The fears are probably a buying opportunity.
But we are in a situation where there isn't enough housing, people needs roofs. Millennials are more numerous than boomers, and coming to an age when people typically buy homes, and are kicked out their high school rooms where they lived so far.
Home sales are decreasing but only because of high prices. And mostly existing home sales are affected.
All this means as long as builders can build cheap/entry level homes, they should be fine.
The fears are probably a buying opportunity.
http://seekingalpha.com/article/1839062-homebuilder-stocks-red-flags-all-over-d-r-hortons-q4-earnings-report#comment_update_link
#investing