D.R. Horton (DHI) Up 0.1% Since Last Earnings Report: Can It Continue?

Core Viewpoint - D.R. Horton reported disappointing fourth-quarter fiscal 2024 results, with earnings and revenues missing estimates and declining year-over-year, primarily due to high mortgage rates and buyer hesitancy [2][3][5]. Earnings and Revenue Summary - Adjusted earnings for Q4 were $3.92 per share, missing the Zacks Consensus Estimate of $4.20 by 6.7% and down 11.9% from $4.45 a year ago [5]. - Total revenues were $10 billion, a decrease of 4.8% year-over-year, and below the expected $10.2 billion [5]. - Homebuilding revenues increased slightly by 1.8% to $8.95 billion, while home sales rose 1.7% to $8.93 billion [7]. Margin and Profitability - The consolidated pre-tax profit margin was 17.1%, down from 19.2% a year ago [6]. - Homebuilding pre-tax margin for fiscal 2024 was 16.1%, contracting by 50 basis points from fiscal 2023 [11]. Segment Performance - Financial Services revenues increased by 1.1% to $222 million, while the Rental business generated $704.8 million, down from $1.39 billion a year ago [9][10]. - The order backlog at the end of fiscal 2024 was 12,180 homes, down 20% year-over-year, with a backlog value of $4.8 billion, down 19% [8]. Financial Position - Cash, cash equivalents, and restricted cash totaled $4.54 billion as of September 30, 2024, up from $3.9 billion at the end of fiscal 2023 [12]. - Total liquidity was $7.6 billion, with $3.1 billion available on the revolving credit facility [12]. Shareholder Returns - D.R. Horton increased its quarterly dividend by 33% to 40 cents per share, reflecting a commitment to disciplined capital allocation [4]. - The company repurchased 3.4 million shares for $561.2 million in Q4, with a remaining stock repurchase authorization of $3.6 billion [14]. Fiscal 2025 Guidance - The company expects consolidated revenues between $36 billion and $37.5 billion for fiscal 2025, with homes closed anticipated between 90,000 and 92,000 units [15]. Market Position and Outlook - D.R. Horton is positioned to benefit from limited affordable home supply and favorable demographics, despite current market challenges [3][4]. - Estimates for the stock have trended downward, leading to a Zacks Rank of 5 (Strong Sell) [19].