Post Earnings Coverage as D.R. Horton Revenue Grew 20%, EPS Surged 31%

Upcoming AWS Coverage on PulteGroup Post-Earnings Results

LONDON, UK / ACCESSWIRE / January 31, 2017 / Active Wall St. announces its post-earnings coverage on D.R. Horton, Inc. (NYSE: DHI). The Company disclosed its first quarter fiscal 2017 results on January 24, 2017. The Fort Worth, Texas-based homebuilder outperformed earnings and revenue expectations. Register with us now for your free membership at:

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One of D.R. Horton’s competitors within the Residential Construction space, PulteGroup, Inc. (NYSE: PHM), released its Q4 2016 financial results on Thursday, January 26, 2017. AWS will be initiating a research report on PulteGroup in the coming days.

Today, AWS is promoting its earnings coverage on DHI; touching on PHM. Get our free coverage by signing up to:

http://www.activewallst.com/registration-3/?symbol=DHI

http://www.activewallst.com/registration-3/?symbol=PHM

Earnings Reviewed

For the three months ended on December 31, 2016, D.R. Horton reported that home sales increased 15% to 9,241 homes and 17% in value to $2.8 billion compared to 8,064 homes and $2.4 billion in the prior year’s same quarter. The Company’s homebuilding revenue for Q1 FY17 increased 20% to $2.8 billion from $2.4 billion in Q1 FY16. Homes closed in the reported quarter increased 17% to 9,404 homes compared to 8,061 homes in the prior year’s corresponding quarter. The Company’s homebuilding revenue number outperformed market expectations of $2.72 billion.

D.R. Horton’s net income for Q1 FY17 increased 31% to $206.9 million, or $0.55 per diluted share, from $157.7 million, or $0.42 per diluted share, in Q1 FY16. The Company’s earnings per share figures surpassed Wall Street’s estimates of $0.47 per share.

Margin Matters

D.R. Horton’s consolidated pre-tax income increased 32% to $318 million in Q1 FY17 versus $241 million a year ago, and homebuilding pre-tax income increased 28% to $294 million compared to $229 million in Q1 FY16. The Company’s pre-tax profit margin for the reported quarter improved 100 basis points to 11.0% from 10.0% in the corresponding year earlier quarter. D.R. Horton noted that the improvement in pre-tax profit margin was driven primarily by a 70 basis point decrease in homebuilding SG&A expense as a percentage of revenues.

D.R. Horton’s home sales gross margin in Q1 FY17 was 19.8% compared to 19.9% in the prior year’s same quarter and 20.5% in Q4 FY16. The Company noted that gross margin decreased from the fourth quarter primarily due to higher warranty and litigation costs as a percentage of homebuilding revenues.

Home Details

D.R. Horton’s average sales price on net sales orders in Q1 FY17 was $299,100, and cancellation rate (cancelled sales orders divided by gross sales orders) for the reported quarter was 22% compared to 23% in Q1 FY16. D.R. Horton’s sales order backlog of homes under contract at December 31, 2016, increased 6% to 11,312 homes and 7% in value to $3.4 billion compared to 10,665 homes and $3.2 billion at December 31, 2015. First-time homebuyers represented 45% of the closings handled by D.R. Horton’s Mortgage Company compared to 43% in Q1 FY16. The Company’s average closing price for the reported quarter was $297,000, up 2% compared to last year.

For Q1 FY17, D.R. Horton stated that entry-level homes marketed under its Express Homes brand accounted for 28% of homes closed and 20% of home sales revenue. The Company’s homes for higher end move-up and luxury buyers priced greater than $500,000 were 7% of homes closed and 17% of home sales revenue.

D.R. Horton stated that in the current housing market, the Company continues to expect its average home sales gross margin to be around 20%, with quarterly fluctuations that may range from 19% to 21% due to product and geographic mix and the relative impact of warranty, litigation and interest costs.

Cash Flow and Balance Sheet

D.R. Horton ended Q1 FY17 with $1.1 billion of homebuilding unrestricted cash and homebuilding debt to total capital of 28.6%. Homebuilding debt to total capital consists of homebuilding notes payable divided by total equity plus homebuilding notes payable. As of December 31, 2016, the Company had $888 million of available capacity on its revolving credit facility, while homebuilding leverage ratio improved 690 basis points from a year ago to 28.6%. D.R. Horton balance of public notes outstanding at December 31, 2016, was $2.8 billion, and the Company has a total of $350 million of senior notes that will mature in May 2017. At December 31, 2016, D.R. Horton shareholders’ equity was $7 billion and book value per share was $18.70, up 14% from a year ago.

D.R. Horton has declared a quarterly cash dividend of $0.10 per common share. The dividend is payable on February 15, 2017 to stockholders of record on February 03, 2017.

At December 31, 2016, D.R. Horton’s land and lot portfolio consisted of 213,000 lots, of which 119,000, or 56%, are Company owned, and 94,000, or 44%, are controlled through option contracts. 77,000 of D.R. Horton total lots are finished, of which 32,000 are owned and 45,000 are optioned. The Company’s option lot position increased 54% from a year ago, while overall lot position increased 20%.

Outlook

D.R. Horton reaffirmed FY17 guidance including a consolidated pre-tax profit margin of 11.2% to 11.5%, consolidated revenues of $13.4 billion to $13.8 billion, homes closed between 43,500 homes and 45,500 homes and cash flow from operations in the range of $300 million to $500 million. The Company stated that its FY17 results will be significantly impacted by the strength of the spring selling season, and the Company will update its expectations as necessary each quarter.

Stock Performance

At the closing bell, on Monday, January 30, 2017, D.R. Horton’s stock marginally fell 0.74%, ending the trading session at $30.71. A total volume of 4.94 million shares were traded at the end of the day, which was higher than the 3-month average volume of 4.91 million shares. In the last month and previous three months, shares of the Company have advanced 11.23% and 9.83%, respectively. Moreover, the stock surged 12.37% since the start of the year. The Company’s shares are trading at a PE ratio of 12.35 and have a dividend yield of 1.30%.

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