Tap Homebuilding ETFs on Upbeat Earnings & Vaccine Hopes
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D.R. Horton DHI, one of the biggest and well-known homebuilders in the nation, came up with upbeat fourth-quarter fiscal 2020 results before market opened on Nov 10. Earnings and revenues handily beat the respective Zacks Consensus Estimate.
The outlook provided by the company has also been robust. Chairman Donald R. Horton said, "With 38,000 homes in inventory, an ample supply of lots and continued strong sales trends in October, we are well-positioned for another great year in fiscal 2021." Shares surged more than 9% in the key trading session.
Let’s take a look inside the headline numbers:
D.R. Horton reported quarterly adjusted earnings of $2.24 per share, which surpassed the Zacks Consensus Estimate of $1.76 by 27.3% and increased 65.9% from the year-ago period. Total revenues (Homebuilding, Forestar and Financial Services) came in at $6.4 billion, up 27% year over year. The reported figure beat the consensus mark by 8.8%.
Homebuilding revenues of $6.16 billion increased 27.2% from the prior-year quarter. Home sales also increased 27.7% year over year to $6.13 billion, aided by higher home deliveries. However, land/lot sales and other revenues were $33.4 million, down from $42.8 million a year ago.
Home closings increased 26% from the prior-year quarter to 20,248 and 28% in value to $6.1 billion. It recorded growth across all regions, namely East, Midwest, Southeast, and South Central, Southwest and West.
Revenues from the Financial Services segment increased 63.4% from the year-ago level to $220.9 million. Forestar contributed $347.6 million to its total quarterly revenues, reflecting a notable improvement from $236.3 million a year ago.
Upbeat Results From Other Homebuilders Too
Investors should note that results from other homebuilders came in at upbeat too. PulteGroup Inc. PHM reported third-quarter 2020 results, wherein earnings and revenues handily surpassed the Zacks Consensus Estimate. PHM was up 4.8% on Nov 10.
NVR, Inc. NVR reported better-than-expected results for third-quarter 2020, wherein earnings and revenues topped the Zacks Consensus Estimate. NVR gained 4.1% on Nov 10. KB Home KBH reported third-quarter fiscal 2020 (ended Aug 31, 2020) results, wherein both earnings and revenues topped the Zacks Consensus Estimate. KBH added 8.6% on Nov 10.
Vaccine Hopes: Another Tailwind
If this was not enough, Pfizer’s latest announcement that its vaccine candidate was found 90% effective in preventing COVID-19 in participants gave a solid boost to the global stock markets. This triggered hopes of return to normalcy sooner than expected. This is yet another reason to buy homebuilding ETFs now, especially with the Fed being dovish.
ETFs in Focus
Housing ETFs mainly include SPDR S&P Homebuilders ETF XHB, iShares U.S. Home Construction ETF ITB and The Hoya Capital Housing ETF HOMZ. The funds gained 2.3%, 5.0% and 2.5%, respectively, on Nov 10.
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KB Home (KBH) : Free Stock Analysis Report
NVR, Inc. (NVR) : Free Stock Analysis Report
D.R. Horton, Inc. (DHI) : Free Stock Analysis Report
SPDR SP Homebuilders ETF (XHB): ETF Research Reports
iShares U.S. Home Construction ETF (ITB): ETF Research Reports
Hoya Capital Housing ETF (HOMZ): ETF Research Reports
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