Group 1: Company Performance - D.R. Horton (DHI) shares increased by 4.6% to close at $127.87, supported by solid trading volume, contrasting with an 8.7% loss over the past four weeks [1] - The company is expected to report quarterly earnings of $2.69 per share, reflecting a year-over-year decline of 23.6%, with revenues anticipated at $8.14 billion, down 10.6% from the previous year [2] - The consensus EPS estimate for D.R. Horton has been revised 0.6% lower in the last 30 days, indicating a negative trend in earnings estimate revisions [4] Group 2: Industry Insights - Homebuilding stocks, including D.R. Horton, surged due to favorable policy outcomes, specifically tariff exceptions for Canada and Mexico, which the National Association of Home Builders described as a "major win" for the industry [2] - D.R. Horton is part of the Zacks Building Products - Home Builders industry, where PulteGroup (PHM) also operates, closing 3.6% higher at $101.24, but has seen a -9.7% return in the past month [4] - PulteGroup's consensus EPS estimate remains unchanged at $2.48, representing a year-over-year change of -13.6%, and it currently holds a Zacks Rank of 4 (Sell) [5]

Group 1 - The company aims to invest in firms with strong qualitative attributes, purchasing them at attractive prices based on fundamentals, and holding them indefinitely [1] - The investment strategy involves managing a concentrated portfolio to avoid underperformers while maximizing exposure to high-potential winners [1] - The company plans to publish articles on selected companies approximately three times a week, with detailed quarterly follow-ups and ongoing updates [1] Group 2 - The analyst has no current stock, option, or derivative positions in any mentioned companies and does not plan to initiate any within the next 72 hours [2] - The article reflects the analyst's personal opinions and is not influenced by any business relationships with the companies discussed [2]

Core Insights - Elliott Gue is recognized as a leading expert in the energy sector, with extensive experience and a strong educational background in the field [1] - The Energy & Income Advisor, launched by Elliott Gue in October 2012, focuses on identifying profitable investment opportunities in the energy sector, including growth stocks and high-yielding utilities [1] Group 1 - Elliott Gue has dedicated over a decade to understanding the energy industry through various means such as attending conferences and engaging with management teams [1] - The publication launched by Elliott Gue provides in-depth analysis and rational assessments of investment opportunities in the energy sector [1] - Roger Conrad contributes additional analysis on master limited partnerships and Canadian energy stocks to the Energy & Income Advisor [1]

Company Performance - D.R. Horton (DHI) closed at $126.42, showing a +0.35% change from the previous day, outperforming the S&P 500's loss of 0.5% [1] - The stock has decreased by 11.85% over the past month, which is worse than the Construction sector's decline of 10.1% and the S&P 500's loss of 0.47% [1] Upcoming Earnings - D.R. Horton is set to release its earnings report on April 17, 2025, with an expected EPS of $2.74, reflecting a 22.16% decrease from the same quarter last year [2] - The Zacks Consensus Estimate for revenue is projected at $8.16 billion, down 10.42% from the previous year [2] Full-Year Estimates - The full-year Zacks Consensus Estimates predict earnings of $13.04 per share and revenue of $36.71 billion, indicating year-over-year changes of -9.07% and -0.24%, respectively [3] Analyst Estimates - Recent changes in analyst estimates for D.R. Horton suggest a shifting business landscape, with positive revisions indicating a favorable outlook on the company's health and profitability [4] Zacks Rank - D.R. Horton currently holds a Zacks Rank of 5 (Strong Sell), with a 2.6% decrease in the Consensus EPS estimate over the last 30 days [6] Valuation Metrics - The company's Forward P/E ratio stands at 9.66, which is higher than the industry average of 8.22 [7] - D.R. Horton's PEG ratio is currently 0.53, compared to the Building Products - Home Builders industry's average PEG ratio of 0.92 [8] Industry Context - The Building Products - Home Builders industry ranks in the bottom 3% of all industries, with a Zacks Industry Rank of 244 [9]

Core Viewpoint - D.R. Horton reported mixed financial results for Q1 fiscal 2025, with earnings and revenues beating estimates but declining year-over-year, raising questions about future performance amid a challenging housing market [2][5][14]. Financial Performance - Adjusted earnings for Q1 were $2.61 per share, exceeding the Zacks Consensus Estimate of $2.40 by 8.8%, but down 7.4% from $2.82 a year ago [5]. - Total revenues reached $7.6 billion, a decrease of 1.5% year-over-year, yet above analysts' expectations of $7.13 billion [5]. - The consolidated pre-tax profit margin was 14.6%, down from 16.1% in the previous year [6]. Segment Performance - Homebuilding revenues were $7.17 billion, down 1.8% from the prior year, with home sales also declining by 1.8% to $7.15 billion [7]. - Home closings decreased by 1% to 19,059 homes, while net sales orders fell by 1% to 17,837 homes, with the value of net orders down 2% to $6.7 billion [7]. - The order backlog at the end of Q1 was 11,003 homes, down 21% year-over-year, with a backlog value of $4.3 billion [8]. Liquidity and Capital Management - D.R. Horton reported cash and cash equivalents of $3.07 billion as of December 31, 2024, down from $4.54 billion at the end of fiscal 2024, with total liquidity at $6.5 billion [10]. - The company had $5.1 billion in debt, resulting in a debt to total capital ratio of 17% [11]. - D.R. Horton repurchased 6.8 million shares for $1.1 billion in Q1, with $2.5 billion remaining in stock repurchase authorization [12]. Guidance and Market Outlook - For fiscal 2025, D.R. Horton expects consolidated revenues between $36 billion and $37.5 billion, with homes closed anticipated to be between 90,000 and 92,000 units [13]. - Recent estimates have trended downward, with a consensus estimate shift of -14.28%, leading to a Zacks Rank of 5 (Strong Sell) for the stock [14][16].

Core Insights - The United States is facing a significant issue with the lack of affordable housing, particularly in the single-family residence sector, despite an increase in apartment availability [1] Group 1: Housing Market Dynamics - There is a surplus of apartments entering the market, but the starts and completions for single-family homes have not kept pace [1]

Core Viewpoint - There is a significant disconnect between Wall Street homebuilder estimates and current stock valuations, suggesting that the sector is undervalued with potential for substantial earnings growth [1][2]. Earnings Growth Projections - D.R. Horton (DHI) is projected to grow earnings from $13.82 in 2025 to $20.24 in 2028, indicating a 46% growth [3]. - PulteGroup (PHM) and KB Home (KBH) are expected to grow earnings by 22% by 2027 [5]. - Toll Brothers (TOL) is projected to grow earnings by 32% by 2028 [7]. - Lennar (LEN) has the highest expected growth at 82% by 2028 [9]. Market Valuation - Homebuilders are trading at approximately 10X earnings, significantly lower than the S&P 500's 23X forward earnings [21]. - On an EV/EBITDA basis, homebuilders are valued at about 6X, indicating they are trading cheaply compared to historical norms [22]. Industry Dynamics - The U.S. housing market is believed to be undersupplied, with estimates suggesting a shortfall of 2 to 7 million units due to historical underbuilding from 2007 to 2020 [17][20]. - Current mortgage rates have created an affordability crisis, leading to lower demand than historical levels [15]. Business Model Strength - Homebuilders have improved their business models to be more capital light and operate with minimal debt, enhancing their resilience compared to the past [28][31]. - The sector has experienced strong free cash flow, which has been used to pay down debt and buy back shares, improving balance sheets significantly [31][49]. Margins and Market Share - D.R. Horton’s margins are currently around 18%, above historical averages [34]. - Publicly traded homebuilders have captured a larger market share, with homes sold being about double the volume during the housing bubble of 2005, despite overall industry output being lower [44]. Future Outlook - The consensus estimates suggest that 2024 and 2025 will be trough years for the industry, but growth is expected to resume thereafter [16]. - Even with a more moderated growth outlook, homebuilders present an attractive investment opportunity given their current pricing and growth potential [56].

Financial Performance - Consolidated revenues decreased 1% to $7.6 billion compared to $7.7 billion, with pre-tax income down 11% to $1.1 billion[108][116] - Net sales orders decreased 1% to 17,837 homes, with the value of net sales orders down 2% to $6.7 billion[116] - Homes closed decreased 1% to 19,059 homes, and average closing price slightly decreased to $374,900[116] - Home sales revenue for the quarter was $7.1 billion from 19,059 homes closed, a decrease from $7.3 billion from 19,340 homes closed in the prior year[136] - Net income for the three months ended December 31, 2024, was $774.4 million, while net income for the year ended September 30, 2024, was $4,148.9 million[246] Sales and Orders - Sales order backlog decreased 21% to 11,003 homes, with the value of the backlog also decreasing 21% to $4.3 billion[116] - Cancellations of sales orders totaled 3,929, with a cancellation rate of 18%, down from 19% in the previous year[127][128] - The average selling price of net sales orders was $373,000, a decrease of 1% compared to the prior year[129] Rental Operations - Rental revenues increased to $217.8 million compared to $195.3 million, but rental pre-tax income decreased to $11.9 million from $31.3 million[121] - Single-family rental operations closed 311 homes in Q4 2024, down 18% from 379 homes in Q4 2023[170] - Multi-family rental operations saw a 68% increase in homes closed, totaling 504 units in Q4 2024 compared to 300 units in Q4 2023[170] - The gross profit margin for rental operations decreased to 16.0% in Q4 2024 from 27.4% in Q4 2023[172] Financial Services - Financial services revenues decreased 5% to $182.3 million, with pre-tax income down to $48.6 million from $66.0 million[121] - Financial services pre-tax income decreased by 26% to $48.6 million in Q4 2024 from $66.0 million in Q4 2023[183] - Total revenues from financial services operations decreased by 5% to $182.3 million in Q4 2024 from $192.6 million in Q4 2023[188] Margins and Expenses - Homebuilding gross margin was 22.7%, slightly down from 22.9%[116] - SG&A expenses increased by 6% to $636.6 million in Q4 2024, representing 8.9% of homebuilding revenues compared to 8.3% in the prior year[146] - Interest incurred by homebuilding operations rose 57% to $17.9 million in Q4 2024, primarily due to higher average interest rates and increased debt[149] Inventory and Land - As of December 31, 2024, total inventory amounted to $20.65 billion, a slight increase from $20.03 billion on September 30, 2024[163][168] - The company controlled 639,800 lots as of December 31, 2024, with 154,400 lots owned and 485,400 lots under purchase contracts[164] - Approximately 25,700 homes in inventory were unsold as of December 31, 2024, with 10,400 of those completed[167] Debt and Equity - Stockholders' equity was $24.9 billion, down from $25.3 billion[116] - Debt to total capital ratio improved to 17.0% from 18.9%[116] - The company had outstanding notes payable totaling $5.1 billion, with $1.5 billion due within 12 months[199] Share Repurchase and Dividends - The company repurchased 6.8 million shares at a total cost of $1.1 billion during the three months ended December 31, 2024, with $2.5 billion remaining under the stock repurchase authorization[208] - The company declared a quarterly cash dividend of $0.40 per common share, payable on February 14, 2025[237] Legal and Compliance - The company is involved in a lawsuit filed by the Maryland Department of Environment regarding stormwater compliance issues, but does not expect a material loss from this matter[265] - A consent decree related to stormwater compliance issues from 2014 was resolved in April 2024, with costs not expected to exceed $1 million[264] Market Conditions and Outlook - The company anticipates that seasonal patterns will continue to impact home closings and revenue generation, particularly in the third and fourth quarters of the fiscal year[250] - The company expects incentive levels to remain elevated, assuming similar market conditions and no significant changes in mortgage interest rates[141]

Financial Performance - D R Horton reported fiscal 2025 Q1 EPS of $2 61, exceeding analysts' estimate of $2 35 [1] - Total revenue for Q1 2025 was $7 61 billion, surpassing the expected $7 01 billion [1] - Net income declined by 10 8% YoY to $844 9 million, while revenue decreased by 1 4% YoY [3][6] - Home sales revenue dropped 1 8% YoY to $7 15 billion, with homes closed down 1 5% to 19,059 units [3] - Homebuilding pre-tax income fell 8% to $1 billion, with margins tightening to 14 1% from 15% [7] - Rental operations pre-tax income decreased significantly from $31 3 million to $11 9 million, despite revenue growth from $195 3 million to $217 8 million [7] Business Overview - D R Horton is the largest US homebuilder, operating in 125 metropolitan markets across 36 states [4] - The company specializes in a wide range of residential properties, from affordable to luxury homes [4] - D R Horton has prioritized its affordable housing segment in recent years [4] - The company maintains operational flexibility through its majority stake in Forestar Group [5] - D R Horton benefits from economies of scale and vertical integration, particularly through DHI Mortgage [5] Strategic Initiatives - The company focuses on affordability through smaller home designs and price points [8] - Ownership in Forestar helps maintain cost control and meet housing demand [8] - D R Horton leverages its economies of scale, including capital access and procurement efficiencies [8] - The company plans share repurchases between $2 6 billion and $2 8 billion, signaling confidence in cash flow and shareholder value [9] Outlook - D R Horton maintains its fiscal 2025 revenue guidance of $36 billion to $37 5 billion [11] - The company aims to balance market adaptability with efficiency amid interest rate fluctuations [11] - Investors should monitor the 21% decline in sales order backlog, which may impact future revenue streams [12] - D R Horton's ability to manage competitive pressures and economic slowdowns will be critical in upcoming quarters [12]

Group 1: U.S. Stock Market Performance - U.S. stocks traded higher, with the Dow Jones index gaining over 450 points, up 1.07% to 43,951.84 [1] - NASDAQ rose 0.71% to 19,770.38, and S&P 500 increased by 0.85% to 6,047.41 [1] - Utilities shares surged by 1.6%, while energy shares fell by 0.6% [1] Group 2: Company Earnings Reports - D.R. Horton, Inc. reported first-quarter results with sales of $7.61 billion, a 1% year-over-year decline, but exceeding the consensus of $7.08 billion [2] - Earnings per share (EPS) for D.R. Horton was $2.61, beating the consensus estimate of $2.44 [2] Group 3: Commodity Market Updates - Oil prices decreased by 2.3% to $76.09, while gold fell by 0.1% to $2,748.20 [5] - Silver prices increased by 0.6% to $31.335, and copper prices dropped by 1.4% to $4.3070 [5] Group 4: Notable Stock Movements - Evolus Inc shares surged 32% to $13.92 following news of expected FDA approval for Evolysse gels [9] - Helius Medical Technologies Inc shares rose 41% to $1.06 after exceeding enrollment targets for a stroke study [9] - InMed Pharmaceuticals Inc shares increased by 36% to $6.75 due to positive preclinical study results for INM-901 [9] - Canoo Inc shares plummeted 66% to $0.46 after filing for Chapter 7 bankruptcy [9] - FTAI Aviation Ltd shares fell 30% to $78.35 due to potential delays in FY24 10-K filing [9] - New Oriental Education & Tech Group shares dropped 24% to $46.26 after reporting an EPS miss for the second quarter [9]