The earnings crunch is well underway, and leading homebuilders D.R. Horton (NYSE: DHI), Meritage Homes (NYSE: MTH) and PulteGroup (NYSE: PHM) will be taking their turns in the earnings spotlight Thursday, July 24, before the markets open.
KB Home (NYSE: KBH) and Lennar (NYSE: LEN) posted better than expected results in late June on higher home prices and strong demand. Investors will be looking for rising homebuilder confidence, as measured by the National Association of Home Builders (NAHB), to portend good news on earnings and sales.
Related Link: Lennar Beats On Q2 Earnings And Revenues
Analysts on average predict that this Fort Worth, Texas-based builder will report that revenue for the fiscal third quarter rose almost 28 percent year-over-year to $2.08 billion. Earnings of $0.49 per share are also in the consensus forecast. That would be up from a reported profit of just $0.42 per share in the comparable period of last year.
Note that the consensus earnings per share (EPS) estimate has remained unchanged in the past 60 days, and the estimates range from $0.45 to $0.53. The company has not fallen short of analysts' EPS expectations in at least four quarters. The beat in the previous period was by almost 12 percent.
During the three months that ended in June, D.R. Horton acquired the homebuilding operations of Crown Communities. D.R. Horton has a market cap of less than $8 billion and a dividend yield near 0.6 percent. The price-to-earnings (P/E) ratio is less than the industry average.
The share price is up about 11 percent in the past 90 days, even after pulling back from a recent 52-week high. It remains above the 50-day moving average. The stock has outperformed competitors KB Home and PulteGroup over the past six months, but it has underperformed the S&P 500.
Per-share earnings from this Scottsdale, Arizona-based builder are expected to have grown more than nine percent year-over-year to $0.82. Second-quarter revenue will total $513.90 million, which would be a gain of more than 14 percent, if analysts are correct.
Analysts have been wrong about Meritage in the past year, however, underestimating EPS in the first quarter by two cents, or about three percent. That miss was close to the mark; at least the three previous periods analysts missed by double-digit percentages. Analysts anticipate sequential and year-over-year growth on the top and bottom lines in the current quarter.
During its second quarter, Meritage Homes offered SunPower solar systems in select homes at no cost. It has a market cap of less than $2 billion and a long-term EPS growth forecast is about 14 percent. The P/E ratio is less than the industry average, but short interest is more than eight percent of the float.
The share price is down about 12 percent year-to-date. Shares have traded mostly between $40 and $50 since the beginning of 2013. The stock has underperformed not only the broader markets over the past six months, but also all of the homebuilders featured here as well.
Per-share earnings of $0.25 and revenue of $1.34 billion are anticipated from this Michigan-based builder when it shares its second quarter results Thursday morning. That would be up from $0.09 per share and $1.28 billion in sales in the same period of last year.
Here too, the consensus EPS is the same as it was 90 days ago, and individual estimates range from $0.21 to $0.29. The company missed expectations in the previous quarter by a penny per share, but earnings handily topped analysts' consensus estimates in the two periods before that.
During the three months that ended in June, Pulte declared a quarterly dividend and announced executive promotions. It has a market cap of more than $7 billion and a dividend yield near 1.0 percent. Its operating margin is less than the industry average, and the return on equity is more than 66 percent.
The share price has retreated more than four percent since the beginning of July, dropping below the 50-day moving average, but it is still up more than four percent in the past 90 days. The stock has underperformed the broader markets over the past six months, but it has outperformed KB Home and Meritage.
At the time of this writing, the author had no position in the mentioned equities.
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