Core Viewpoint - D.R. Horton Inc. is expected to report its fourth-quarter fiscal 2024 results on October 29, with earnings and revenues anticipated to show a decline compared to the previous year, despite a history of better-than-expected earnings in recent quarters [1][2][3]. Financial Performance - In the last reported quarter, D.R. Horton exceeded the Zacks Consensus Estimate for earnings and revenues by 7.9% and 2.9%, respectively, with earnings and revenues growing 5% and 2% year-over-year [1][2]. - The Zacks Consensus Estimate for the upcoming quarter's earnings per share (EPS) is $4.20, reflecting a 5.6% decrease from the year-ago EPS of $4.45. Revenue is estimated at $10.25 billion, indicating a 2.4% year-over-year decline [3]. Revenue Breakdown - Total revenues for the fiscal fourth quarter are projected to be between $10 billion and $10.4 billion, down from $10.5 billion a year ago. The Homebuilding segment is expected to see a revenue increase due to a higher number of homes closed, while the Forestar and Rental Property segments may experience weakness [4][5]. - Homebuilding revenues are predicted to grow 5.5% year-over-year to $9.28 billion, with an expected average selling price (ASP) of homes closed at $380,400, down 0.7% year-over-year [6]. Segment Performance - Financial Services revenues are expected to reach $239.7 million, a 9.2% increase from the previous year, while Rental Property revenues are projected to decline by 50.6% to $685.8 million, and Forestar revenues are expected to decrease by 18.4% to $448.3 million [7]. Margin Expectations - Higher costs for land, labor, and materials are anticipated to impact margins, with home sales gross margin expected to contract to 24% from 25.1% a year ago. Selling, general and administrative (SG&A) expenses as a percentage of revenues are expected to rise to approximately 7% [8][9]. Order and Backlog Insights - Net sales orders are projected to increase by 14.5% year-over-year to 21,692 units, while the backlog is expected to decrease to 14,131 units, down from 15,197 units a year ago, with a backlog value of $5.54 billion [10]. Earnings Prediction - The model does not predict an earnings beat for D.R. Horton in the upcoming quarter, as the company has an Earnings ESP of -0.42% and a Zacks Rank of 4 (Sell) [11][12].

Core Insights - Analysts project D.R. Horton (DHI) will report quarterly earnings of $4.16 per share, a decline of 6.5% year over year, with revenues expected to reach $10.25 billion, down 2.4% from the same quarter last year [1] Revenue Estimates - Estimated 'Revenues- Home sales- Homebuilding' is projected at $9.28 billion, indicating a year-over-year increase of 5.7% [2] - 'Revenues- Financial Services' is forecasted to reach $242.77 million, reflecting a year-over-year growth of 10.6% [2] - 'Revenues- Rental' is expected to be $592.24 million, showing a significant decline of 57.3% from the prior-year quarter [2] Homebuilding Metrics - The consensus estimate for 'Revenues- Homebuilding' stands at $9.31 billion, representing a 5.8% increase from the year-ago quarter [3] - 'Homes Closed' is predicted to reach 24,301, up from 22,928 in the same quarter last year [3] - 'Net sales order - Homes sold' is estimated at 20,333, compared to 18,939 from the previous year [3] - 'Sales order backlog - Value' is projected to be $5.11 billion, down from $5.92 billion in the same quarter last year [3] - 'Net sales order - Value' is expected to arrive at $7.71 billion, compared to $7.25 billion in the same quarter last year [3] Sales Order Backlog - 'Sales order backlog - Homes in backlog - Northwest' is estimated at 613, up from 547 year-over-year [4] - 'Sales order backlog - Homes in backlog - North' is expected to be 1,627, compared to 1,458 last year [4] - 'Sales order backlog - Value - Northwest' is projected to reach $325.86 million, up from $278.10 million year-over-year [4] - 'Sales order backlog - Value - North' is expected to be $715.37 million, compared to $617.70 million last year [4] Stock Performance - D.R. Horton shares have declined by 3.7% over the past month, contrasting with a 1.5% increase in the Zacks S&P 500 composite [4]

Core Insights - The article emphasizes the importance of conducting personal in-depth research and due diligence before making investment decisions, highlighting the inherent risks involved in trading [2]. Group 1 - The analysis is intended solely for informational purposes and should not be interpreted as professional investment advice [2]. - There is a clear disclaimer regarding the lack of any stock, option, or derivative positions in the companies mentioned, indicating a neutral stance [1]. - The article notes that past performance is not indicative of future results, reinforcing the need for careful consideration by investors [2].

Group 1 - Hurricane Milton has caused significant damage in Florida, potentially delaying new home construction and impacting the overall U.S. housing market [1] - Florida accounts for 14% of single-family home permits and ranks second in the U.S. for new home construction, with major cities like Jacksonville, Orlando, and Tampa among the top for new builds [2] - Home builders with high exposure in Florida include Taylor Morrison Home Corp, PulteGroup, Lennar Corp, and D.R. Horton Inc [1][2] Group 2 - Lennar reported a 5% year-over-year increase in new orders to 20,587 homes and a 16% year-over-year increase in deliveries to 21,516 homes, with a backlog of 16,944 homes valued at approximately $7.7 billion [3] - Upcoming quarterly earnings reports from Pulte, Taylor Morrison, and D.R. Horton may reflect conservative outlooks due to the hurricane's impact [2][3] - The iShares U.S. Home Construction ETF includes significant holdings in D.R. Horton (14.6%), Lennar (11.7%), and Pulte (7.8%) [3]

Core Viewpoint - The content emphasizes the importance of conducting personal due diligence and consulting competent advisors before making any financial decisions, particularly in the context of investments and trading [1]. Group 1 - The website provides general news, personal analysis, and third-party content intended for educational and research purposes [1]. - It explicitly states that the information should not be interpreted as recommendations or advice for any financial actions [1]. - The content is not tailored to individual financial situations or needs, highlighting the necessity for users to apply their own discretion [1]. Group 2 - The website includes information about complex financial instruments such as cryptocurrencies and contracts for difference (CFDs), which carry a high risk of losing money [1]. - Users are encouraged to perform their own research before making investment decisions, particularly regarding instruments they do not fully understand [1].

Group 1: D.R. Horton - D.R. Horton is positioned to benefit from a significant housing shortage in the U.S., with an estimated deficit of 4.5 million homes [2] - The potential for the Federal Reserve to lower interest rates by at least 0.25% could boost home sales, positively impacting D.R. Horton's stock [2] - The stock is currently trading below 12 times forward earnings and has a five-year PEG ratio of 0.62, indicating strong growth prospects at a low valuation [3] Group 2: Nvidia - Nvidia's share price has seen significant growth this year, with expectations for further increases due to the upcoming launch of its Blackwell architecture GPUs [4] - The Blackwell GPUs are projected to have up to 25 times lower costs and energy consumption compared to previous models, which could lead to substantial revenue in 2024 [4] - CEO Jensen Huang anticipates that Blackwell could be the most successful product in Nvidia's history, with a new product rollout cycle expected to continue [5] Group 3: Vertex Pharmaceuticals - Vertex Pharmaceuticals has experienced double-digit percentage gains this year, driven by the early stages of the commercial launch of Casgevy, a CRISPR gene-editing therapy [6] - Analyst projections suggest that Casgevy could achieve peak annual sales of at least $3 billion [6] - The company anticipates regulatory approvals for suzetrigine and vanzacaftor by early 2025, with suzetrigine expected to have significant market potential as a non-opioid pain treatment [7] - Vertex's pipeline includes promising drugs targeting kidney diseases, which could become blockbuster products if approved [7]

Mortgage Rates and Market Impact - Mortgage rates fell for the sixth consecutive week, reaching the lowest level since February 2023, with the average contract interest rate for a 30-year fixed-rate mortgage at 6.29%, nearly a full percentage point lower than the same week last year [1] - Applications for mortgages to purchase homes increased by 2% for the week, indicating a positive response to the lower rates [1] Homebuilding Stocks Performance - D. R. Horton Inc (NYSE:DHI) stock is up 0.9% at $187.06, nearing its record high of $193.63 from August 26, with a 32.7% increase this quarter and a 64.3% year-over-year gain [1] - PulteGroup Inc (NYSE:PHM) shares rose 1.6% to $133.60, approaching its all-time high of $136.47, with a 73.5% increase over the last 12 months and a 29.4% gain year-to-date [2] - Lennar Corp (NYSE:LEN) is up 0.8% at $179.59, having reached $181.12 earlier, but remains below its August 26 peak of $186.60, with year-over-year and year-to-date gains of 54.9% and 20.5%, respectively [2]

Company Performance - D.R. Horton (DHI) stock closed at $187.53, with a slight increase of +0.01% compared to the previous day, underperforming the S&P 500 which gained 0.45% [1] - Over the past month, D.R. Horton shares have increased by 8.98%, significantly outperforming the Construction sector's gain of 1.61% and the S&P 500's gain of 2.54% [1] - The upcoming earnings report on October 29, 2024, is projected to show earnings of $4.14 per share, reflecting a year-over-year decline of 6.97%, with anticipated revenue of $10.24 billion, indicating a 2.54% decrease from the same quarter last year [1] Earnings Estimates - Full-year Zacks Consensus Estimates for D.R. Horton predict earnings of $14.03 per share and revenue of $37.02 billion, representing year-over-year changes of +1.52% and +4.41%, respectively [2] - Recent changes in analyst estimates are crucial as they reflect near-term business trends, with positive revisions indicating a favorable outlook on the company's health and profitability [2] Valuation Metrics - D.R. Horton has a Forward P/E ratio of 13.37, which is a premium compared to the industry average Forward P/E of 9.53 [3] - The company holds a PEG ratio of 0.87, which is lower than the industry average PEG ratio of 0.96, indicating a potentially undervalued position relative to its projected earnings growth [3] Industry Context - The Building Products - Home Builders industry, part of the Construction sector, holds a Zacks Industry Rank of 22, placing it in the top 9% of over 250 industries [4] - The strength of the industry is measured by the Zacks Industry Rank, which is based on the average Zacks Rank of individual stocks, with the top 50% rated industries outperforming the bottom half by a factor of 2 to 1 [4]

Core Viewpoint - D.R. Horton is positioned to benefit from lower interest rates and has shown strong performance, with shares reaching an all-time high following impressive earnings results and favorable macroeconomic conditions [1][2]. Financial Performance - In July, D.R. Horton reported a 2% sales growth and a 5% increase in earnings compared to the previous year, despite weak new orders and a reduced full-year sales forecast [2]. - The company has achieved a 6.8% compound annual sales growth rate (CASGR) since 2004, with net profits, earnings per share, and cash flows growing faster than revenue [3][4]. Competitive Position - D.R. Horton is the largest U.S. homebuilder by revenue, closing over 24,000 units in the most recent quarter, outperforming competitors like Lennar [5]. - The company has diversified its revenue streams through rental operations and financial services, providing more stable cash flows and simplifying the buying process for customers [5][6]. Market Dynamics - Newly built houses constitute approximately one-third of total residential inventory, a significant increase from around 15% before the global financial crisis [7]. - D.R. Horton has gained market share due to its broad geographical footprint and exposure to various price segments, which mitigates reliance on specific economic conditions [6][7]. Valuation - D.R. Horton's stock is considered somewhat expensive relative to peers, with a forward price-to-earnings (P/E) ratio under 13, indicating no significant speculation in the price [8]. - The company maintains strong financial health metrics, including ample liquidity and a reasonable capital structure, which should support it during economic downturns [9].

Federal Reserve and Dollar Impact - The Federal Reserve is expected to cut interest rates soon, which will have significant implications for various markets, including the dollar, housing, and equities [1][2] - The Dollar Index (DXY) has shown a notable increase in 2022 due to aggressive rate hikes but is now showing signs of potential decline, with a critical support level between 100-101 [2] Housing Market Insights - The housing market is currently experiencing a slump, with housing starts falling to an annual rate of 1.24 million in July, the lowest in over four years [6][7] - A 50-basis point decline in the 30-year mortgage rate and potential Fed rate cuts may improve market affordability, although challenges remain [6][7] - D.R. Horton Inc. (DHI) is highlighted as a strong player in the homebuilding sector, with 69% of homes delivered in the past year priced under $400,000, indicating a focus on affordable housing [8] Energy and Utilities Sector - The energy transition presents profit opportunities in both traditional oil and gas stocks and renewable energy companies, with utilities performing well in 2024 due to favorable conditions [9][10] - The demand for electricity is expected to remain strong, driven by factors such as AI-related data center investments, despite concerns about the Chinese economy [10]