D.R. Horton (DHI) Q3 Earnings & Revenues Beat Estimates

D.R. Horton, Inc. (NYSE:DHI) came up with yet another stellar show in the third quarter of fiscal 2017. Both earnings and revenues beat the Zacks Consensus Estimate courtesy of a solid housing market scenario. The Texas-based homebuilder’s order trends remained strong in the quarter.

Earnings & Revenue Discussion

The company reported earnings of 76 cents per share, beating the Zacks Consensus Estimate of 75 cents by a penny. Earnings also increased 15.2% year over year driven by higher home sales.

Total revenue (homebuilding and financial services) of $3.78 billion beat the Zacks Consensus Estimate of $3.71 billion by 5.2%. Total revenue also increased 16.8% year over year.

Home Closings and Orders

Homebuilding revenues of $3.68 billion increased 17% year over year. Home sales increased 17.4% year over year to $3.66 billion, aided by higher home deliveries. Land/lot sales and other revenues were $22.2 million, down from $30.1 million a year ago.

Home closings increased 16% to 12,497 homes, while in value it increased 17%. The company registered growth across all the regions comprising East, Midwest, Southeast, South Central, Southwest and West.

Net sales orders rose 11% to 13,040 homes on continued improvement. Orders increased across all operating regions. The value of net orders grew 13% to $3.9 billion. Cancellation rate of 21% is the same as it was in the year-ago quarter..

The quarter-end sales order backlog (under contract) rose 3% to 15,161 homes. Backlog value increased 6% to $4.6 billion.

Revenues at the financial services segment increased 10.6% to $91.9 million.

Margins

Gross profit on home sales was $725.4 million, increasing 14.7% year over year. However, gross margin on home sales contracted 50 basis points (bps) year over year to 19.8%.

Homebuilding selling, general and administrative expenses (SG&A) were $309.5 million, reflecting an increase of 10.8% from the prior-year quarter. SG&A expenses, as a percentage of homebuilding revenues, were 8.4%, down 50 bps year over year.

Homebuilding pre-tax income rose 19.2% year over year to $415.2 million.

Consolidated pre-tax income was $444.5 million in the quarter, increasing 17% year over year. Pre-tax profit margin expanded 10 bps year over year to 11.8%.

Balance Sheet

D.R. Horton’s homebuilding cash, cash equivalents and restricted cash totaled $471.7 million as of Jun 30, 2017, compared with $1,281.3 million as of Sep 30, 2016.

Zacks Rank

D.R. Horton carries a Zacks Rank #2 (Buy).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Peer Release

PulteGroup Inc.’s (NYSE:PHM) second-quarter 2017 adjusted earnings of 47 cents per share beat the Zacks Consensus Estimate of 45 cents by 4.4%. Also, quarterly earnings reflected a solid 27% jump from the year-ago quarter’s adjusted figure of 37 cents (read more: PulteGroup Q2 Earnings & Revenues Beat, Backlog Strong).

NVR, Inc. (NYSE:NVR) , one of the country’s largest homebuilding and mortgage-banking companies, reported second-quarter 2017 earnings of $35.19 per share, surpassing the Zacks Consensus Estimate of $28.63 by 22.9%.

Upcoming Peer Release

Masco Corporation (NYSE:MAS) is slated to release its quarterly results on Jul 27. The Zacks Consensus Estimate for earnings is pegged at 60 cents, reflecting an increase of 29.8% year over year.

D.R. Horton, Inc. Price, Consensus and EPS Surprise

D.R. Horton, Inc. Price, Consensus and EPS Surprise | D.R. Horton, Inc. Quote

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