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D.R. Horton’s Revenue Beats but EPS Misses, Marginally

Nov 11,2014  Company News  Comment: 0

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New York City, New York – (StockNewsDesk) – 11/11/2014 — One of the largest homebuilders of US, D.R. Horton Incorporation posted fourth quarter and full-year earnings results. For the fourth quarter, the company posted earnings per share (EPS) of 0.45 while revenue came in at $2.4 billion, beating earlier year EPS of 0.40 and revenue of $1.8 billion. However, EPS missed the Street’s estimates by 3 cents while revenue beats the expectations marginally.

For the fiscal year, EPS was recorded at $1.50 compared with an earlier year reading of $1.33. Sales figure of the company increased to $7.9 billion against the last year’s figure of $6.1 billion. Here too, EPS missed analysts’ expectation by 4 cents while revenue expectations were just above expectations.

Home sales of the company increased quarter over quarter (QoQ) as well as year over year (YoY). Sales increased from 6,866 to 8612 on a quarterly basis while on a yearly basis, home sales increased from 25,120 to 29,709. The company’s sales order backlog increased to 9,888, up 21%. The total value of the backlog came in at $2.21 billion. On a yearly basis, net sales grew to $8.3 billion, up 27%.

Concerns over Rising Costs

The revenue of the company increased by more than 30%, but the positive effect evaporated with the increase in cost of sales. Cost of sales increased by 26% compared to the Street estimates of 20%. The company did not offer any guidance. However, the Chief Executive Officer (CEO) of the company did mention that company is off a good start for 2015. The CEO gave this statement because the backlog of this company increased 29% QoQ while on an annual basis, it grew 20% YoY.

D.R. Horton’s Revenue Beats but EPS Misses, Marginally

Wall Street expects D.R. Horton to earn an EPS of $0.39 against revenues of $1.92 billion in first quarter of 2015. For fiscal 2015, analysts expect the company to earn an EPS of $1.84 against revenues of $9.38 billion. The cause of concern is the rising costs. Fall in gross margin implies the rise in input costs, which might be due to skilled labor shortage. Besides, it also suggests that the average rise in the home prices is falling. Either way this can negatively affect the bright side of the entire sector.

The share price of the company is up by 0.70%. The share price has broken its yearly trading range of $17.67 and $25.23. Currently, the share price of the company is $23.60, and soon it can capture its peak of $25.

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