Shares of leading homebuilder DR Horton rose 9.1% on Tuesday after the company posted better-than-expected results for the fourth quarter of fiscal 2020 (ended Sept. 30). Also, the company hiked its quarterly dividend per share by 14% to $0.20, with the dividend payable on Dec. 14. DR Horton has a dividend yield of 1.08%.
DR Horton’s (DHI) revenue grew 27% to $6.4 billion, sailing ahead of analysts’ estimate of $5.88 billion. Net sales orders soared 81% year-over-year to 23,726 homes. Also, the cancellation rate came down to 19% in 4Q FY20, compared to 23% in 4Q FY19. The company’s 4Q results reflect a strong US housing market backed by low mortgage rates. 4Q EPS increased 66% year-over-year to $2.24, easily surpassing analysts’ forecast of $1.76.
Looking ahead, the company expects FY21 revenue to be in the range of $24 billion to $25 billion, compared to $20.3 billion in FY20. It predicts FY21 homes closed to land between 77,000 and 80,000. (See DHI stock analysis on TipRanks)
Chairman of DR Horton’s Board Donald R. Horton stated “Our strong balance sheet, liquidity and low leverage provide us with flexibility to operate effectively through changing economic conditions, and we plan to maintain our disciplined approach to investing capital to enhance the long-term value of our company. 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.”
DHI shares have risen 34.4% year-to-date. The average analyst price target stands at $83.50, reflecting an upside potential of 17.8% from the current levels.
Recently, Raymond James analyst Buck Horne upgraded DR Horton to Buy from Hold with a price target of $85. The analyst believes that DR Horton remains one of the best-positioned homebuilders to capitalize on the key post-COVID secular drivers, which are now moving thousands of buyers into suburban communities. Horne added that no other homebuilder runs its production machine as efficiently or delivers more consumer value per square foot than DR Horton.
The rest of the Street is cautiously optimistic about DR Horton. 5 Buys and 4 Holds add up to a Moderate Buy analyst consensus for the stock.