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D.R. Horton (NYSE:DHI) experienced a notable 9.1% slump in its stock during Tuesday midday trading, marking its most substantial one-day decline since June 2020. This downturn followed the company’s reception of fewer home orders than analysts had anticipated for fiscal Q1 2024.
The figures for the quarter ended on December 31, 2023, revealed that the company’s net sales orders totaled 18,069, falling short of the Visible Alpha consensus of 18,728. In comparison, the previous quarter saw 18,939 orders, while Q1 2023 logged 13,382.
The company also reported that its gross margin on home sales revenue was adversely affected by incentives, reduced home prices to enhance homebuyer affordability, and the decreased value of hedging instruments used to provide below-market interest rate financing to homebuyers. Consequently, the Q1 gross margin of 22.9% plunged 220 basis points from the previous quarter.
Looking ahead to the quarter ending March 31, 2024, D.R. Horton anticipates generating consolidated revenue of $8.1B-$8.3B, surpassing the $7.99B consensus. The company also aims to close the sale of 20,000 to 20,500 homes, outperforming the Visible Alpha estimate of 19,092. Additionally, the gross margin on home sales revenue is expected to range between 22.6% and 23.1%, compared to 22.9% in Q1.
“Our home sales gross margin for the full year of fiscal 2024 will be dependent on the strength of demand and other market conditions during the spring in addition to changes in mortgage interest rates,” emphasized D.R. Horton Vice President of Investor Relations Jessica Hansen during the company’s earnings call.
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