D.R. Horton Poised to Announce Earnings Amid Financial Challenges
As the market anticipates D.R. Horton, Inc. (DHI) releasing its fiscal Q1 earnings on Tuesday, January 21, the company faces a landscape shaped by economic pressures.
Projected Earnings Decline
With a market capitalization of $44.9 billion, D.R. Horton stands as a major player in the homebuilding industry. The Arlington, Texas-based firm not only constructs and sells single-family homes, targeting both entry-level buyers and those looking to move up, but also offers mortgage financing and title insurance services. Analysts expect DHI to report earnings of $2.39 per share, reflecting a 15.3% decrease from $2.82 per share reported in the same quarter last year. Notably, D.R. Horton has outperformed Wall Street projections in two of the last four quarters, but it has also fallen short on two occasions. Its adjusted earnings of $3.92 per share last quarter missed consensus estimates by 6.7% and marked an 11.9% decline from the previous year.
Future Earnings Projections
Looking ahead to fiscal 2025, analysts predict an earnings per share (EPS) of $14, a slight dip of 2.4% from $14.34 in fiscal 2024. However, optimism lingers for fiscal 2026, where EPS may see a rebound, projected to rise by 10.6% to $15.49.
Stock Performance in Context
Over the past year, DHI’s stock has decreased by 8%, which starkly contrasts with the S&P 500 Index’s increase of 23.3% and the Consumer Discretionary Select Sector SPDR Fund’s rise of 25.5%. On October 29, shares dropped by 7.2% following an underwhelming fiscal Q4 earnings report and a dim outlook for 2025.
Challenges and Market Conditions
The earnings report revealed softer-than-expected figures, with earnings per share at $3.92 and revenue hitting $10 billion. Factors contributing to this include high mortgage rates and a reluctance among potential homebuyers, who are delaying purchases in the hopes of lower rates. Affordability issues and a tough competitive market have also slowed buying activity. Additionally, the company’s revenue forecast for 2025, at $36 billion to $37.5 billion, along with home delivery estimates between 90,000 and 92,000 units, fell short of analyst expectations.
Analysts’ Sentiment and Stock Outlook
Despite these challenges, analysts maintain a “Moderate Buy” rating for D.R. Horton. Out of 19 analysts monitoring the stock, nine advocate for a “Strong Buy,” while eight recommend a “Hold,” and two suggest a “Strong Sell.” This marks a slight decline in bullish sentiment from three months ago when ten analysts were calling for a “Strong Buy.” The average price target for DHI stands at $185.55, suggesting a notable potential upside of 32.7% from current levels.
On the date of publication, Neharika Jain did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article are solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
The views and opinions expressed herein are those of the author and do not necessarily reflect those of Nasdaq, Inc.
