D.R. Horton Shares Drop Despite Earnings Beat as Homebuilder’s Fiscal-Year Guidance Misses Views

D.R. Horton (DHI) dropped 5% as the homebuilder’s revenue guidance for fiscal 2019 came in below market expectations.

The Arlington, Texas-based company said it expects consolidated revenue between $16.7 billion and $17 billion, below Capital IQ’s consensus of $17.2 billion.

D.R. Horton said it earned $0.93 per diluted per share in its fiscal second quarter, up from $0.91 in the prior-year quarter and ahead of Capital IQ’s view of $0.87. Revenue rose to $4.13 billion in the quarter ended March 31, up from $3.79 billion. The Street had expected $4.04 billion.

“The D.R. Horton team delivered solid results in our second quarter,” said Donald R. Horton, the company’s chairman. “These results reflect the strength of our experienced operational teams, industry-leading market share, broad geographic footprint and affordable product offerings across multiple brands.”

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The company said 13,480 home sales closed in the quarter, up from 12,281 the year before. Net sales for orders rose to 16,805 homes valued at $4.9 billion from 15,828 homes valued at $4.7 billion last year.

The company ended the quarter with $557.3 million of homebuilding unrestricted cash and a 22.9% homebuilding debt to total capital ratio.

“Our continued strategic focus is to consolidate market share while growing our revenues and profits, generating strong annual cash flows and returns and maintaining a flexible financial position,” Horton said. “With 32,100 homes in inventory at the end of March and 316,000 lots owned and controlled, we are well-positioned for the remainder of fiscal 2019 and future years.”

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In its guidance, the company expects 55,000 to 56,000 homes to close in its fiscal 2019 and $1 billion in homebuilding cash flow from operations. The closing guidance was ahead of Wedbush’s expectation of 54,000 homes.