The Higher Costs in the Market Affect D.R Horton (NYSE:DHI)’s Earnings

D.R Horton (NYSE:DHI) is the largest residential building contractors in the U.S market. The company was founded in 1978, by Donald Ray Horton, and constructs and sells single-family homes, town houses and condominiums. The company recently released its quarterly earnings. Prior to the opening of the market on Tuesday, Horton Inc. (NYSE:DHI) announced its 2014 results, which included the 4^th quarter as well. The homebuilder company declared diluted quarterly EPS of $0.45 on revenues of $2.4 billion. A year ago, the earning per share around the same time was reported to be $0.40 on revenue of $1.8 billion. The 3^rd quarter results also compare to the Thomson Reuters consensus estimates for earning per share of $0.48 and $2.38 billion in revenue.

In September, the full financial year will be ending, and Horton (NYSE:DHI) has reported the earning per share of $1.50, in comparison to the $1.33 for fiscal 2013. A year ago, the total revenue generated was $6.1 billion; however, the revenue generated this year went further up to the total of $7.9 billion. The estimated revenue as per the consensus showed the earning per share of $1.54 on revenues of $7.81 billion.

In the 4^th quarter of 2013, the home sales closed went up to 8,612 from 6,866. The backlog sales order of Horton (NYSE:DHI) also went up as compared to last year’s 8,205 to 9,888; with the net total of $2.21 billion.

For the 4^th quarter, Horton (NYSE:DHI)’s cancellation rate was 28%. The net sales order for the fiscal year went up 18%, to 29,709 homes from 25,120 in 2013. The value of the net sales order grew 27% to $8.3 billion from $6.6 billion.

The analysts were expecting a 20% raise in the earning per share. However, the costs of sales rose up to 26%.

The CEO of D.R Horton (NYSE:DHI) said that the company’s revenue and pre-tax profits can easily grow up into double digit numbers, because of the company’s solid balance sheet along with industry leading market share, and the inventories that the company offer to its homes and finished lots. The company has a good reputation in the market and buyers trust it. He also said that the company is all set to rule the 2015 because of its great start with a 29% increase in the early backlog value, and a great year on year value of October sales order whose net was over 20%.

Horton (NYSE:DHI) did not offer further guidelines regarding its sales and earnings for the future. However, as per the consensus estimates for the first quarter of the company’s fiscal year 2015, the earning per share are predicted to be $0.36 on revenues of $1.92 billion. Furthermore the analyst’s expectation for the whole year is of $1.84 EPS on revenues of $9.38 billion.

Thomas Reuters, an analyst had predicted the target price of $24.75 prior to the announcement of the results. However, on Tuesday’s premarket trading the shares were up 0.8% at $23.25 in a 52 week range of $17.67 to $25.23.