D. R. Horton Inc. (NYSE:DHI)’s Earnings Diminished by Increased Costs

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By Daniel Craine on November 11, 2014 Company

D. R. Horton Inc. (NYSE:DHI) posted its fourth quarter earnings and the entire fiscal 2014 on Tuesday morning. The Earnings per Share reported by the company were $0.45 and revenues were of $2.4 billion. Last year, during the same quarter, the EPS reported was $0.40 and revenue generated was $1.8 billion. The results for its third-quarter were close to the estimates of analysts – $2.38 billion in revenue and $0.48 EPS.

As the full year ended in the month of September, D. R. Horton Inc. (NYSE:DHI) recorded EPS of $1.50, which was greater than the EPS of last year; $1.33. Last year, the revenue was $6.1 billion, while this year, revenue grew to $7.9 billion. The company’s report was close to the consensus’ estimates of $1.54 EPS and $7.81 billion revenue.

Home sales increased in this year to 8612 from 6866 in the previous fiscal. The backlog for sales orders of the company grew up to 9888 from 8205 last year. The total value was $2.21 billion. The cancellation rate of D. R. Horton Inc. (NYSE:DHI) was 28% in the fourth quarter of this year. Net Sales orders in the current year increased to 29,709 by 18%. In the last fiscal, the net sales orders amounted to 25,120 and value of the net sales also increased by 27% ($8.3 billion).

For the fourth quarter, home sales revenue increased by one-third. However, the cost of the sales only increased by 29%. The analysts had expected EPS to increase by 20%, but D. R. Horton Inc. (NYSE:DHI) could not meet these expectations because of rising costs that diminished the effects of the higher prices of sales.

According to the CEO of D. R. Horton Inc. (NYSE:DHI), the company is in a good position to continue growth in both pre-tax profits and revenues. The growth will occur in double-digit values based on the balance sheet, leading market share in the industry, diverse products that are offered by three different brands, a wide geographic presence and giant inventories of finished lots and homes both. He said that the company will have a great start of 2015 fiscal, considering an increase in backlog value by 29% and over 20% increase Y-o-Y in the net sales orders of October.

D. R. Horton Inc. (NYSE:DHI), however, did not give any more information than the CEO’s statement described above. Analysts have estimated that the company will earn an EPS of $0.36 in the first quarter of 2015 fiscal to revenue of $1.92 billion. As for the full fiscal 2015, analysts have estimated that the company will achieve earnings per share of $1.84 and revenues worth $9.38 billion.

In the pre-market trade on Tuesday morning, D. R. Horton Inc. (NYSE:DHI)’s shares increased by 0.8% to $23.25. The 52-week range of the company was $17.67 – $25.23. Before the results were announced, the Thomas Reuters’ analysts had estimated a price target of about $24.75.

The company is growing and has growth potential but higher costs affect earnings.