Shares of D.R. Horton (DHI 0.78%) fell 9.2% on Tuesday after the country's largest homebuilder announced mixed quarterly results relative to expectations.
Falling home prices put a dent in D.R. Horton's profits
For its fiscal first quarter of 2024 ended Dec. 31, 2023, revenue grew 6.5% year over year to $7.73 billion, translating to net income of $947.4 million, or $2.82 per share. Analysts, on average, were modeling slightly higher earnings of $2.88 per share on lower revenue of $7.59 billion.
Digging deeper into D.R. Horton's results, its number of homes closed during the quarter grew 12% to 19,340, but increased only 8% in value to $7.3 billion due to lower home prices. The company also repurchased 3.3 million shares during the quarter for just over $398 million.
Company Chairman Donald R. Horton noted that while inflation and mortgage rates remain elevated, net sales orders grew 35% year over year given a combination of favorable housing demand and limited supply of both new and existing homes at affordable price points.
What's next for D.R. Horton shareholders?
"We are well-positioned to meet challenging market conditions with our affordable product offerings and flexible lot supply," Horton added, "and are focused on turning our inventory to maximize returns and capital efficiency in each of our communities."
Looking ahead to the rest of the fiscal year, D.R. Horton now expects full-year revenue of $36 billion to $37.3 billion (an increase of $300 million to the high end of its previous range), assuming 87,000 to 90,000 homes closed by its homebuilding operations (up from 86,000 to 89,000 before). D.R. Horton reiterated its outlook for both cash flow from homebuilding operations of $3 billion and share repurchases of $1.5 billion this fiscal year.
In the end, this was indeed a reasonably strong quarter from D.R. Horton. But with shares still up nearly 50% over the past year, it's no surprise to see the stock pulling back today as investors digest the company's incremental profit headwinds.
