D.R. Horton, Inc. (NYSE:DHI) defied analyst predictions to release its second-quarter results, which were ahead of market expectations. It was a decent earnings report, with revenues and statutory earnings per share (EPS) both performing well. Revenues were 11% higher than the analysts had forecast, at US$9.1b, while EPS of US$3.52 beat analyst models by 15%. Earnings are an important time for investors, as they can track a company's performance, look at what the analysts are forecasting for next year, and see if there's been a change in sentiment towards the company. We thought readers would find it interesting to see the analysts latest (statutory) post-earnings forecasts for next year.
Following last week's earnings report, D.R. Horton's 19 analysts are forecasting 2024 revenues to be US$36.9b, approximately in line with the last 12 months. Statutory earnings per share are forecast to shrink 5.7% to US$14.21 in the same period. Yet prior to the latest earnings, the analysts had been anticipated revenues of US$36.8b and earnings per share (EPS) of US$14.19 in 2024. The consensus analysts don't seem to have seen anything in these results that would have changed their view on the business, given there's been no major change to their estimates.
There were no changes to revenue or earnings estimates or the price target of US$170, suggesting that the company has met expectations in its recent result. That's not the only conclusion we can draw from this data however, as some investors also like to consider the spread in estimates when evaluating analyst price targets. There are some variant perceptions on D.R. Horton, with the most bullish analyst valuing it at US$200 and the most bearish at US$130 per share. This shows there is still a bit of diversity in estimates, but analysts don't appear to be totally split on the stock as though it might be a success or failure situation.
Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that revenue is expected to slow, with a forecast annualised decline of 0.7% by the end of 2024. This indicates a significant reduction from annual growth of 17% over the last five years. Compare this with our data, which suggests that other companies in the same industry are, in aggregate, expected to see their revenue grow 5.1% per year. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - D.R. Horton is expected to lag the wider industry.
The Bottom Line
The most important thing to take away is that there's been no major change in sentiment, with the analysts reconfirming that the business is performing in line with their previous earnings per share estimates. On the plus side, there were no major changes to revenue estimates; although forecasts imply they will perform worse than the wider industry. The consensus price target held steady at US$170, with the latest estimates not enough to have an impact on their price targets.
With that in mind, we wouldn't be too quick to come to a conclusion on D.R. Horton. Long-term earnings power is much more important than next year's profits. We have forecasts for D.R. Horton going out to 2026, and you can see them free on our platform here.
Before you take the next step you should know about the 1 warning sign for D.R. Horton that we have uncovered.
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