Financial Data and Key Metrics Changes - Earnings for Q3 2024 were $4.10 per diluted share, a 5% increase from the prior year quarter [11] - Consolidated pre-tax income rose 1% to $1.8 billion, with revenues increasing 2% to $10 billion, resulting in a pre-tax profit margin of 18.1% [11] - Cash flow from home building operations for the nine months ended June 30 was $972 million, with consolidated cash flow of $228 million [11][23] - Return on inventory for the trailing 12 months was 29.5%, and return on equity was 21.5% [11][24] Business Line Data and Key Metrics Changes - Home sales revenues increased 6% to $9.2 billion, with 24,155 homes closed compared to 22,985 homes in the prior year [13] - Net sales orders for Q3 increased 1% to over 23,000 homes, with order value flat at $8.7 billion [14] - Gross profit margin on home sales revenues was 24%, up 80 basis points sequentially [16] - Home building SG&A expenses increased by 12% from last year, with SG&A as a percentage of revenues at 7.1% [17] Market Data and Key Metrics Changes - The average selling price of homes was approximately $380,000, with an average closing price of $382,200, up 2% sequentially [12][13] - The company had 42,600 homes in inventory, with 26,200 unsold homes at the end of the quarter [18] - The rental operations generated $64 million of pre-tax income on $414 million of revenues [20] Company Strategy and Development Direction - The company aims to enhance capital efficiency to produce consistent, sustainable returns and increase consolidated operating cash flows [12] - Focus on maintaining a sufficient start pace and homes in inventory to meet demand while improving capital efficiency [18] - The strategic relationship with 4 Star, a majority-owned residential lot development company, is vital for returns-focused business model [21] Management's Comments on Operating Environment and Future Outlook - Management noted that despite inflation and elevated mortgage rates, homebuyer demand remained good due to limited supply of affordable homes [12] - The company expects to generate consolidated revenues of $36.8 to $37.2 billion for the full year of fiscal 2024 [27] - Anticipated cash flow from home building operations is approximately $3 billion for fiscal 2024, with plans for increased share repurchases and dividends [27][28] Other Important Information - The company repurchased 3 million shares for $441 million during the quarter, with a new share repurchase authorization totaling $4 billion [25] - The average FICO score for borrowers was 725, with first-time home buyers representing 57% of the closings [22] Q&A Session Summary Question: Absorption rates and margin focus - Management balanced price and pace to drive returns, maintaining incentives without overly focusing on sales pace [32] Question: Existing home inventory impact - Management noted that while inventory increased, it did not significantly impact sales, maintaining competitive advantages [34] Question: Inter-quarter sales and closings - Management observed choppy traffic patterns due to volatile interest rates but ended the quarter with better demand [37] Question: Cash flow and consolidated cash flow expectations - Management expects consolidated cash flow to be closer to home building cash flow levels going forward [43] Question: Lot costs and inflation expectations - Management indicated that lot costs are expected to normalize, with potential for low to mid-single-digit inflation in fiscal 2025 [79]

Economic Indicators - Initial Jobless Claims rose to +243K, marking a near-term high since August of last year, with the previous week revised to +223K [1] - Continuing Claims reached +1.867 million, the highest since November 2021, indicating a significant increase from the previous week's 1.847 million [1] - Philly Fed manufacturing index improved to 13.9 in July, the highest since April, marking six consecutive months of positive growth [2] Company Earnings - Abbott Labs (ABT) reported earnings of $1.14 per share, beating expectations by 4 cents, with revenues of $10.38 billion surpassing the $10.35 billion forecast, driven by a +10.2% growth in its Medical Devices segment [3] - D.R. Horton (DHI) posted fiscal Q3 earnings of $4.10 per share and $9.97 billion in sales, exceeding expectations by +7.9% and +2.9% respectively, with shares up +3.8% following the report [3] Market Trends - Netflix (NFLX) is expected to report +42.9% earnings per share growth and +16.4% revenue increase for Q2, maintaining a strong performance with only two earnings misses since 2022 [4] - Market indices showed a rotation towards tech-related industries, with the Nasdaq up +159 points and the S&P 500 up +17 points, while the Dow experienced a decline of -102 points [4]

Market Overview - U.S. stocks traded higher with the Dow Jones index gaining around 40 points, up 0.10% to 41,238.64, NASDAQ rose 0.22% to 18,036.66, and S&P 500 increased 0.21% to 5,600.18 [1] - Industrials shares jumped by 0.6%, while health care shares fell by 0.4% [1] Company Earnings - D.R. Horton, Inc. reported second-quarter earnings of $4.10 per share, exceeding the analyst consensus estimate of $3.78 per share, with quarterly sales of $9.966 billion, surpassing the consensus estimate of $9.771 billion [1] Notable Stock Movements - Onconetix, Inc. shares surged 85% to $0.2761 following the announcement of closing a warrant exercise for $1.11 million gross proceeds [2] - Silo Pharma, Inc. shares increased 66% to $3.74 after entering into a Device and CMC Development Master Plan with Resyca BV [2] - Chuy's Holdings, Inc. shares rose 48% to $37.35 after Darden Restaurants announced its acquisition of the company [2] Declining Stocks - Agenus Inc. shares dropped 54% to $8.17 after the FDA discouraged an accelerated approval pathway [3] - Leslie's, Inc. shares fell 30% to $2.8699 after reporting preliminary financial results for the third quarter and cutting full-year guidance [3] - Fitell Corporation shares decreased by 22% to $21.00 [3]

D.R. Horton (DHI) came out with quarterly earnings of $4.10 per share, beating the Zacks Consensus Estimate of $3.80 per share. This compares to earnings of $3.90 per share a year ago. These figures are adjusted for non-recurring items.This quarterly report represents an earnings surprise of 7.89%. A quarter ago, it was expected that this homebuilder would post earnings of $3.08 per share when it actually produced earnings of $3.52, delivering a surprise of 14.29%.Over the last four quarters, the company ha ...

D.R. Horton Inc. (DHI) is slated to report third-quarter fiscal 2024 (ended Jun 30, 2024) results on Jul 18, before the opening bell.In the last reported quarter, the company’s earnings and revenues beat the Zacks Consensus Estimate by 14.3% and 10.2%, respectively. Yet, earnings and revenues of this homebuilding company grew 28.9% and 14% from the year-ago reported figures.Markedly, D.R. Horton reported better-than-expected earnings in 20 of the last 21 quarters.The Trend in Estimate RevisionThe Zacks Cons ...

Group 1: Market Overview - The Consumer Price Index fell 0.1% in June, marking the first decline in inflation in four years, which may lead the Federal Reserve to consider cutting interest rates as early as September [1] - The stock market experienced a rally due to the hopeful outlook on interest rates, particularly benefiting sectors adversely affected by previous rate increases [1] Group 2: D.R. Horton (DHI) - D.R. Horton, one of the largest homebuilders, has shown resilience despite high interest rates, outperforming the S&P 500 over the past two years [2] - The company's backlog of sales orders fell by 7% to 17,873 homes, and the value of homes for sale decreased by 5% to $7 billion [2] - D.R. Horton shares were down 10% year-to-date before the inflation report but rose to a 1% increase afterward; however, it is considered a stock to sell if the Fed does not cut rates as expected [3] Group 3: SolarEdge Technologies (SEDG) - The residential solar industry has been negatively impacted by high financing costs, leading to a significant contraction in sales, particularly in California, where the market shrank between 66% and 83% last year [4][5] - SolarEdge Technologies, the second-largest inverter manufacturer, saw its stock collapse by 71% over the last six months, although it rose 16% following the inflation report [5] - If inflation spikes again and the Fed fails to cut rates, SolarEdge is identified as a stock to sell [5] Group 4: Titan Machinery (TITN) - Small-cap stocks, including Titan Machinery, are struggling due to high interest rates, which increase borrowing costs and limit growth opportunities [6] - Titan Machinery reported that while agriculture sales rose in the first quarter, overall revenue growth was constrained by declining demand for equipment purchases due to expected lower net farm income [6] - The company's stock is down 44% in 2024, although it experienced a 5% increase after the inflation report; it is also considered a stock to sell if interest rate cuts do not materialize [7]

The June CPI was much better than expected and has the broad market set up to rally over the next six to 12 months. The rally is driven by the expectation for FOMC interest rate cuts, which will reduce the cost of money and reinvigorate the bull market, assuming no recession unfolds. While most stocks should see the benefit of lower rates, specific sectors, industries, and stocks are in better positions. Among them are small and mid-caps, viewed as more agile and able to make quicker shifts, consumer-orient ...

Homebuilding Industry Overview - The homebuilding industry has been negatively impacted by rising mortgage rates and escalating building costs since early 2022, leading to the lowest level of housing starts in May in nearly four years [1] - Mortgage rates peaked at nearly 7% in early May 2023, contributing to a decline in new home construction [1] Inflation Data - The consumer price index (CPI) decreased by 0.1% month over month in June, marking the first monthly decrease since May 2020, with a year-over-year increase of 3% [2] - The core CPI rose by 0.1% month over month in June, with a year-over-year increase of 3.3%, the smallest since April 2021 [2] - The core personal consumption expenditure (PCE) price index rose by 0.1% month over month in May, with a year-over-year increase of 2.6%, the lowest since March 2021 [3] Rate Cut Expectations - Economists are advocating for the Federal Reserve to reduce the benchmark lending rate from its current range of 5.25-5.5%, the highest in 23 years, to prevent a potential recession [4] - The probability of a Fed fund rate cut by 25 basis points in September is currently at 96.3%, up from around 62% two weeks prior [4] Impact on Homebuilders - Lower mortgage rates, influenced by potential Fed rate cuts, are expected to increase demand from homebuyers [5] - Reduced inflation and market interest rates will lower input costs for homebuilders and provide cheaper credit sources for business expansion [5] Homebuilder Stocks - Five homebuilder stocks with strong growth potential have been identified, all showing positive earnings estimate revisions in the last 60 days [6] - D.R. Horton Inc. (DHI) is benefiting from limited supply and strong demand for affordable homes, with expected revenue and earnings growth rates of 4.5% and 3.4%, respectively [7] - KB Home (KBH) is positioned for growth due to its Returns-Focused Growth Plan, with expected revenue and earnings growth rates of 4.5% and 18.2%, respectively [8] - NVR Inc. (NVR) is experiencing improved demand trends, with a backlog increase of 7% year-over-year and expected revenue and earnings growth rates of 8.6% and 6.6%, respectively [9] - PulteGroup Inc. (PHM) raised its 2024 guidance for closings to nearly 31,000 homes, with expected revenue and earnings growth rates of 7.9% and 10%, respectively [11] - Toll Brothers Inc. (TOL) focuses on affordable luxury communities and plans to return cash to shareholders, with expected revenue and earnings growth rates of 4.6% and 14.2%, respectively [12]

The housing market has faced headwinds in recent times, primarily due to the impact of rising interest rates. This surge in borrowing costs has slowed down homebuying activity, leading to a decline in homebuilder stock prices. However, recent economic indicators suggest a potential shift in the market that could benefit the homebuilding sector. The decline in inflation, as reflected in the Consumer Price Index (CPI), has fueled optimism about the Federal Reserve potentially lowering interest rates. This pot ...

Key TakeawaysHomebuilder stocks jumped after the milder-than-expected June inflation print fueled investors' hopes that the Federal Reserve will cut its influential fed funds rates this year.With a lower fed funds rate, all kinds of borrowing would be less expensive including mortgages. High mortgage rates have hindered potential homebuyers from entering the market by pushing up the monthly payment on already pricey houses. Homebuilder stocks jumped Thursday on hopes that mortgage rates will start to signi ...