Warren Buffett-backed D.R. Horton reported better-than-expected fiscal fourth-quarter earnings and revenue early Tuesday. The results provided investors with some optimistic guidance for the homebuilder's 2024 performance and the U.S. housing market. DHI shares advanced Tuesday.
D.R. Horton, the largest publicly traded homebuilder, announced Tuesday that fiscal Q4 EPS fell 5% to $4.45 while sales increased 9% to $10.5 billion. Wall Street had expected earnings of $3.97 per share and revenue totaling $10.08 billion.
"Despite continued higher mortgage rates and inflationary pressures, our net sales orders increased 39% from the prior year quarter, as the supply of both new and existing homes at affordable price points remains limited and demographics supporting housing demand remain favorable," Chairman Donald R. Horton said in the earnings release.
For the full fiscal year, the Warren Buffett-backed company saw EPS fall 16% to $13.82 and sales increase 6% to $35.46 billion.
D.R. Horton also provided initial guidance for fiscal 2024, expecting revenue between $36-$37 billion and anticipating deliveries of between 86,000 and 89,000 home units. DHI also expects share repurchases of around $1.5 billion in fiscal 2024, up from $1.2 billion in fiscal 2023.
Analysts' consensus has D.R. Horton fiscal 2024 revenue totaling $36.09 billion and deliveries of 87,685 homes, according to FactSet.
D.R. Horton stock gained 2.9% to 121.18 in above average volume Tuesday during market action. The Warren Buffett stock has gained more than 16% in November.
Warren Buffett Bets On Housing Stocks
D.R. Horton stock has formed a valid cup base and is around 9% below an official 132.30 buy point, according to MarketSmith analysis. The Warren Buffett stock has surged 22% since hitting a recent low in October.
U.S. homebuilder stocks rallied aggressively through the first half of the year, as rising interest rates slowed sales of existing houses, channeling demand into the market for newly built homes.
The Building-Residential/Commercial industry group ranks a lofty No. 14 out of 197 groups tracked by IBD. Homebuilder stocks collectively have advanced more than 30% so far in 2023.
Berkshire holds a 1.76% stake in D.R. Horton. Warren Buffett's Berkshire Hathaway bet on the supply-constrained U.S. housing market. It opened new positions this year worth a total of more than $800 million in S&P 500 stocks Lennar, D.R. Horton and NVR.
Meanwhile, the big picture in the U.S. is that of a long-term housing shortage. The construction of new homes has not kept pace with the growing population. Rising material costs, supply-chain issues and labor shortages since the Covid pandemic have exacerbated the issue.
The shortage is currently running at a deficit of about 5.5 million homes, according to the National Association of Realtors (NAR). The gap is so large it would take more than a decade to close, NAR says, even if new-home construction accelerates.
The Warren Buffett-DHI stock has an 88 Composite Rating out of 99. D.R. Horton stock also has a 91 Relative Strength Rating. The EPS Rating is 78.
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