Winners And Losers Of Q2: D.R. Horton (NYSE:DHI) Vs The Rest Of The Home Builders Stocks

Earnings results often indicate what direction a company will take in the months ahead. With Q2 behind us, let’s have a look at D.R. Horton (NYSE:DHI) and its peers.

Traditionally, homebuilders have built competitive advantages with economies of scale that lead to advantaged purchasing and brand recognition among consumers. Aesthetic trends have always been important in the space, but more recently, energy efficiency and conservation are driving innovation. However, these companies are still at the whim of the macro, specifically interest rates that heavily impact new and existing home sales. In fact, homebuilders are one of the most cyclical subsectors within industrials.

The 12 home builders stocks we track reported a mixed Q2. As a group, revenues beat analysts’ consensus estimates by 2.8%.

Valuation multiples for many growth stocks have not yet reverted to their early 2021 highs, but the market was optimistic at the end of 2023 due to cooling inflation. This year has been a different story as mixed inflation signals have led to market volatility. However, home builders stocks have held steady amidst all this with share prices up 1.1% on average since the latest earnings results.

D.R. Horton (NYSE:DHI)

One of the largest homebuilding companies in the U.S., D.R. Horton (NYSE:DHI) builds a variety of new construction homes across multiple markets.

D.R. Horton reported revenues of $9.97 billion, up 2.5% year on year. This print exceeded analysts’ expectations by 3.8%. Despite the top-line beat, it was still a mixed quarter for the company with a decent beat of analysts’ earnings estimates but a miss of analysts’ backlog sales estimates.

David Auld, Executive Chairman, said, “The D.R. Horton team delivered strong results in our third fiscal quarter of 2024, highlighted by earnings of $4.10 per diluted share, up 5% from the same quarter last year. Consolidated pre-tax income was $1.8 billion on revenues of $10.0 billion, with a pre-tax profit margin of 18.1%. Although inflation and mortgage interest rates remain elevated, the supply of both new and existing homes at affordable price points is still limited, and demographics supporting housing demand continue to be favorable.

D.R. Horton achieved the highest full-year guidance raise of the whole group. Unsurprisingly, the stock is up 14.3% since reporting and currently trades at $180.

Read our full report on D.R. Horton here, it’s free.

Best Q2: Skyline Champion (NYSE:SKY)

Founded in 1951, Skyline Champion (NYSE:SKY) is a manufacturer of modular homes and buildings in North America.

Skyline Champion reported revenues of $627.8 million, up 35.1% year on year, outperforming analysts’ expectations by 4.6%. It was a stunning quarter for the company with an impressive beat of analysts’ earnings and volume estimates.

The market seems happy with the results as the stock is up 18% since reporting. It currently trades at $87.83.

Is now the time to buy Skyline Champion? Access our full analysis of the earnings results here, it’s free.

Weakest Q2: TopBuild (NYSE:BLD)

Established in 2015 following a spinoff from Masco Corporation, TopBuild (NYSE:BLD) is a distributor and installer of insulation and other building products.

TopBuild reported revenues of $1.37 billion, up 3.7% year on year, falling short of analysts’ expectations by 2.3%. It was a weak quarter for the company with a miss of analysts’ earnings and organic revenue estimates.

As expected, the stock is down 11.5% since the results and currently trades at $376.88.

Read our full analysis of TopBuild’s results here.

Meritage Homes (NYSE:MTH)

Originally founded in 1985 in Arizona as Monterey Homes, Meritage Homes (NYSE:MTH) is a homebuilder specializing in designing and constructing energy-efficient and single-family homes in the US.

Meritage Homes reported revenues of $1.70 billion, up 8.2% year on year, surpassing analysts’ expectations by 9.1%. Revenue aside, it was a slower quarter for the company with full-year revenue guidance missing analysts’ expectations and a miss of analysts’ backlog sales estimates.

Meritage Homes achieved the biggest analyst estimates beat but had the weakest full-year guidance update among its peers. The stock is down 3.3% since reporting and currently trades at $185.29.

Read our full, actionable report on Meritage Homes here, it’s free.

Installed Building Products (NYSE:IBP)

Founded in 1977, Installed Building Products (NYSE:IBP) is a company specializing in the installation of insulation, waterproofing, and other complementary building products for residential and commercial construction.

Installed Building Products reported revenues of $737.6 million, up 6.6% year on year, in line with analysts’ expectations. Revenue aside, it was a weak quarter for the company with a miss of analysts’ organic revenue and earnings estimates.

The stock is down 23.3% since reporting and currently trades at $207.62.

Read our full, actionable report on Installed Building Products here, it’s free.

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