Group 1 - D.R. Horton (DHI) is currently ranked 1 (Strong Buy) in the Zacks Rank system, indicating a strong earnings outlook compared to its peers in the Construction sector [1][2] - Year-to-date, D.R. Horton has returned 14.4%, outperforming the average Construction sector gain of 14% [2] - The Zacks Consensus Estimate for DHI's full-year earnings has increased by 1.1% over the past three months, reflecting improved analyst sentiment [2] Group 2 - D.R. Horton is part of the Building Products - Home Builders industry, which ranks 67 in the Zacks Industry Rank, and has gained an average of 16.6% this year [3] - Despite D.R. Horton's strong performance, it is slightly underperforming its industry average [3] - Another notable stock in the same industry, KB Home (KBH), has returned 28.1% year-to-date and has a Zacks Rank of 2 (Buy) [2][3]

Core Viewpoint - D.R. Horton (DHI) has received a Zacks Rank 1 (Strong Buy) upgrade, indicating a positive earnings outlook that may lead to increased buying pressure and stock price appreciation [1][2]. Earnings Estimates and Revisions - The Zacks Consensus Estimate for D.R. Horton for the fiscal year ending September 2024 is projected at $14.29 per share, reflecting a 3.4% increase from the previous year [5]. - Over the past three months, the consensus estimate for D.R. Horton has risen by 0.5%, indicating a trend of increasing earnings estimates [5]. Zacks Rating System - The Zacks Rank system classifies stocks based on earnings estimate revisions, with D.R. Horton now positioned in the top 5% of Zacks-covered stocks, suggesting potential for near-term stock price increases [4][7]. - Historically, Zacks Rank 1 stocks have generated an average annual return of +25% since 1988, highlighting the effectiveness of the rating system in identifying strong investment opportunities [4]. Market Dynamics - The relationship between earnings estimate revisions and stock price movements is well-established, with institutional investors often driving price changes based on these revisions [3]. - The upgrade of D.R. Horton reflects an improvement in the company's underlying business, which is expected to be recognized by investors through increased stock prices [3].

Earnings and Profitability - Earnings per diluted share increased 5% to $4.10 on net income of $1.4 billion[1] - Homebuilding pre-tax income increased 7% to $1.6 billion with a pre-tax profit margin of 17.0%[8] - Net income for the nine months ended June 30, 2024, was $3,506.2 million, compared to $3,269.7 million for the same period in 2023[26] - Basic net income per common share for the nine months ended June 30, 2024, was $10.50, up from $9.46 for the same period in 2023[26] - Consolidated income before income taxes for Q2 2024 was $1.80 billion, slightly up from $1.78 billion in Q2 2023[29][30] Revenue Growth - Consolidated revenues increased 2% to $10.0 billion[1] - Revenues for the three months ended June 30, 2024, were $9,965.7 million, compared to $9,725.6 million for the same period in 2023[26] - Home sales revenue for Q2 2024 reached $9.23 billion, up from $8.70 billion in Q2 2023, reflecting a 6.1% year-over-year growth[29][30] - Financial services revenue increased to $242.3 million in Q2 2024 from $228.5 million in Q2 2023, a 6% year-over-year growth[29][30] - Consolidated revenues guidance for fiscal 2024 updated to approximately $36.8 billion to $37.2 billion[19] Home Sales and Closings - Homes closed increased 5% to 24,155 homes and 6% in value to $9.2 billion[1] - Net sales orders increased 1% to 23,001 homes and were flat in value at $8.7 billion[1] - Net sales orders for the nine months ended June 2024 totaled 67,526 homes valued at $25.57 billion, up from 59,403 homes valued at $22.27 billion in the same period of 2023[33] - Total homes closed across all regions reached 24,155 units in Q2 2024, up 5.1% from 22,985 units in Q2 2023, with a total value of $9.23 billion, up 6.1% from $8.70 billion[34] - Homes closed in the Northwest region increased to 1,427 units in Q2 2024, up 18% from 1,209 units in Q2 2023, with a total value of $720.7 million, up 10.3% from $653.6 million[34] - Southwest region homes closed rose to 2,673 units in Q2 2024, a 15.4% increase from 2,316 units in Q2 2023, with a total value of $1.31 billion, up 17.3% from $1.12 billion[34] - South Central region homes closed decreased to 6,104 units in Q2 2024, down 5.8% from 6,477 units in Q2 2023, with a total value of $2.01 billion, down 7.4% from $2.17 billion[34] - Southeast region homes closed increased to 6,669 units in Q2 2024, up 2.2% from 6,616 units in Q2 2023, with a total value of $2.42 billion, up 1.3% from $2.38 billion[34] Rental Operations - Rental operations pre-tax income of $64.2 million on $413.7 million of revenues[1] - Rental property sales revenue grew to $413.7 million in Q2 2024, compared to $667.1 million in Q2 2023, indicating a 38% decline[29][30] Share Repurchases and Liquidity - Repurchased 3.0 million shares of common stock for $441.4 million[1] - New share repurchase authorization of $4.0 billion[1] - Consolidated cash balance at June 30, 2024 was $3.0 billion with total liquidity of $5.8 billion[3] - The company's Board of Directors approved a new share repurchase authorization totaling $4.0 billion[22] Cash Flow and Financial Position - Total cash, cash equivalents, and restricted cash decreased to $3,020.0 million as of June 30, 2024, compared to $3,900.1 million as of September 30, 2023[25] - Net cash provided by operating activities for the nine months ended June 30, 2024, was $228.2 million, compared to $2,261.1 million for the same period in 2023[27] - Net cash used in financing activities for the nine months ended June 30, 2024, was $947.2 million, compared to $1,117.5 million for the same period in 2023[27] - Cash provided by operating activities for the nine months ended June 2024 was $228.2 million, a significant decrease from $2.26 billion in the same period of 2023[29][30] Inventory and Land Development - Total inventory increased to $25,536.1 million as of June 30, 2024, up from $22,373.3 million as of September 30, 2023[25] - Inventory and land option charges increased to $14.8 million in Q2 2024 from $10.8 million in Q2 2023, reflecting higher costs in land development[29][30] - Total land/lots owned and controlled in the Southwest region increased to 49,600 in June 2024, up 6.6% from 46,500 in September 2023[39] - South Central region land/lots owned and controlled rose to 146,500 in June 2024, up 37.9% from 106,200 in September 2023[39] - Southeast region land/lots owned and controlled increased to 167,600 in June 2024, up 6.3% from 157,600 in September 2023[39] - Homes in inventory in the East region increased to 8,300 units in June 2024, up 16.9% from 7,100 units in September 2023[40] - Total homes in inventory across all regions reached 42,600 units in June 2024, up 1.4% from 42,000 units in September 2023[40] Regional Performance - The Southeast region contributed the highest home sales value at $2.17 billion in Q2 2024, maintaining a strong market presence[33] - The South Central region recorded the highest number of net sales orders at 17,733 homes for the nine months ended June 2024, up from 15,905 homes in 2023[33] - Consolidated assets increased from $32.58 billion in September 2023 to $35.15 billion in June 2024, driven by growth in homebuilding and rental segments[28] Cost Management - Cost of sales for the three months ended June 30, 2024, was $7,323.7 million, compared to $7,141.8 million for the same period in 2023[26] - Selling, general, and administrative expenses for the three months ended June 30, 2024, were $923.6 million, compared to $852.1 million for the same period in 2023[26]

Core Insights - D.R. Horton, Inc. reported strong third-quarter fiscal 2024 results, with earnings and revenues exceeding Zacks Consensus Estimates, driven by limited supply of affordable homes and favorable housing demand demographics [1][2] Earnings, Revenues & Margin Discussion - Adjusted earnings were $4.10 per share, beating the consensus estimate of $3.80 by 7.9% and increasing 5% from the previous year [2] - Total revenues reached $10 billion, a 2% year-over-year increase, surpassing the consensus mark of $9.68 billion by 2.9% [2] - The consolidated pre-tax profit margin was 18.1% for the quarter [2] Segment Details - Homebuilding revenues were $9.24 billion, up 6% year-over-year, with home sales at $9.23 billion, reflecting a 6.1% increase [3] - Home closings rose 5% to 24,155 homes, while net sales orders increased 1% to 23,001 homes [3] - The value of net orders remained flat at $8.7 billion, with a cancellation rate of 18% [3] - Order backlog decreased by 12% year-over-year to 16,792 homes, with a backlog value of $6.6 billion [3] - Financial Services revenues increased 6% to $242.3 million, while Forestar contributed $318.4 million, down from $368.9 million a year ago [3][4] Balance Sheet Details - Cash and cash equivalents totaled $2.99 billion, down from $3.87 billion at the end of fiscal 2023 [5] - Total homebuilding liquidity was $5.8 billion, with debt at $5.7 billion and a debt to total capital ratio of 18.8% [5] - The trailing 12-month return on equity was 21.5% [5] - The company repurchased 3 million shares for $441.4 million in the fiscal third quarter, with remaining stock repurchase authorization of $459.7 million [6] Updated Fiscal 2024 Views - D.R. Horton expects consolidated revenues between $36.8 billion and $37.2 billion, slightly revised from previous expectations [7] - Homes closed are anticipated to be between 90,000 and 90,500 units [7] - Cash flow from homebuilding operations is projected to be nearly $3 billion, with share repurchases now estimated at approximately $1.8 billion [7]

Core Insights - D.R. Horton exceeded analysts' expectations in earnings per share (EPS), revenue, and homes closed for its fiscal third quarter [1] - The company has narrowed its full-year revenue guidance while slightly raising its homes closed estimate [1] - Executive chair David Auld highlighted ongoing macroeconomic challenges, including elevated inflation and mortgage interest rates [3] Financial Performance - D.R. Horton reported EPS of $4.10, representing a 5% year-over-year increase [1] - Revenue rose over 2% to $9.97 billion, surpassing consensus estimates [1] - The company closed 24,155 new homes in the quarter, a 5% increase from the previous year, with a total value of $9.23 billion, averaging over $380,000 per home [1] Sales Orders - The company recorded 23,001 new sales orders valued at $8.7 billion, falling short of the expected 24,664 orders and $9.31 billion in value [2] Future Outlook - D.R. Horton has revised its full-year revenue projection to between $36.8 billion and $37.2 billion, down from a previous estimate of $36.7 billion to $37.7 billion [3] - The company now anticipates closing between 90,000 to 95,000 homes in fiscal 2024, a slight increase from the earlier estimate of 89,000 to 91,000 [3] Market Reaction - Following the earnings report, D.R. Horton shares surged over 11% to $175.35 [3]

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 ...