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MarketScreener Homepage  >  Equities  >  Nyse  >  D.R. Horton    DHI

D.R. HORTON (DHI)
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D.R. Horton forecasts weak home sales, shares fall 10 percent

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11/08/2018 | 10:35am EST
FILE PHOTO: A house built by the D.R. Horton company is seen for sale in Arvada

(Reuters) - D.R. Horton shares fell more than 10 percent after the largest U.S. homebuilder forecast first-quarter home sales below analysts' estimates on Thursday, the latest sign that rising mortgage rates and higher home prices are weighing on the housing market.

The weakness in shares also hit other homebuilders' stocks. PulteGroup fell 6 percent, while Lennar was down 4 percent.

The housing market has been a weak spot in a robust U.S. economy, with economists blaming the sluggishness on rising mortgage rates, which have combined with higher house prices, to make home purchasing unaffordable for some buyers.

"The buyer is probably affordably stretched and taking a little bit of time to reset to changing market environment," D.R. Horton Chief Operating Officer Michael Murray said on a conference call with analysts.

The company said it was seeing a rise in incentive spending for homes priced $300,000 and above. These kinds of homes make up about a third of the company's total deliveries.

The homebuilder said it expects incentives to increase in the face of the choppy demand environment and forecast full-year 2019 home sales gross margins to be in the range of 20 percent to 22 percent, with the midpoint below analysts' estimate of 21.48 percent.

Demand is holding up in the less expensive category, but homebuilders have not been able to boost supplies as they have been held back by scarce labor, limited lot supplies and rising raw material costs.

Single-family homebuilding, which accounts for the largest share of the housing market, has lost momentum since hitting a pace of 948,000 units last November, which was the strongest in more than 10 years.

D.R. Horton said on Thursday it expects first-quarter home deliveries in the range of 11,000-11,500 units, below analysts' average estimate of 11,852 homes, according to IBES data from Refinitiv.

The company, however, did not provide any details of its sales and profit expectations for 2019.

For the fourth quarter, the company's revenue rose 8.3 percent to $4.51 billion, but fell just short of estimate of $4.57 billion.

The company's net income rose 48.8 percent to $466.1 million, or $1.22 per share, in the fourth quarter ended Sept. 30, in line with analysts' expectation.

The broader PHLX housing index <.HGX>, down 22.3 percent this year, fell another 3 percent.

(Reporting by Ankit Ajmera and Rachit Vats in Bengaluru; Editing by James Emmanuel, Sweta Singh and Sriraj Kalluvila)

By Ankit Ajmera

Stocks mentioned in the article
ChangeLast1st jan.
D.R. HORTON 0.16% 38.48 Delayed Quote.11.02%
LENNAR CORPORATION 1.50% 45.88 Delayed Quote.15.45%
PULTEGROUP 0.75% 28.07 Delayed Quote.8.00%
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Financials ($)
Sales 2019 17 299 M
EBIT 2019 2 226 M
Net income 2019 1 653 M
Debt 2019 1 286 M
Yield 2019 1,57%
P/E ratio 2019 9,00
P/E ratio 2020 8,34
EV / Sales 2019 0,91x
EV / Sales 2020 0,81x
Capitalization 14 456 M
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Technical analysis trends D.R. HORTON
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Mean consensus OUTPERFORM
Number of Analysts 19
Average target price 44,5 $
Spread / Average Target 16%
EPS Revisions
Managers
NameTitle
David V. Auld President & Chief Executive Officer
Donald Ray Horton Chairman
Michael J. Murray Chief Operating Officer & Executive Vice President
Bill W. Wheat CFO, Principal Accounting Officer & Executive VP
Michael R. Buchanan Independent Outside Director
Sector and Competitors
1st jan.Capitalization (M$)
D.R. HORTON11.02%14 456
DAIWA HOUSE INDUSTRY CO LTD4.11%21 860
SEKISUI HOUSE LTD3.79%10 460
PERSIMMON14.04%9 133
PULTEGROUP7.20%7 825
SEKISUI CHEMICAL CO LTD0.13%7 187